Bitcoin ETF in 3 weeks? BTC traders are not doing as it is happening.
Bitcoin (BTC) is about to hit an all-time low in terms of leverage, which one analyst says is “amazing.”
Although up nearly 200% year-to-date, BTC's price strength is finding little interest at the close of the 2023 candlestick, according to Glassnode data from Chain Analytics.
Binance leads the flow of Bitcoin usage.
Bitcoin's leverage ratio, as well as cash-margins and crypto-margined open interest, are “mute” at current prices, with the former on the verge of hitting all-time lows.
This, according to CryptoSlate research analyst James Van Straten, is highly unusual – in three weeks, the United States could approve the first Bitcoin spot exchange-traded fund (ETF).
“Understanding key metrics provides important insights as the digital asset market continues to evolve. One such indicator, the Estimated Leverage Ratio (LR), provides an indication of market potential and is interesting,” he wrote in a Dec. 19 post.
“Currently, ELR is approaching historic lows – an event that has only happened twice before. This indicates a significant reduction in market potential, indicating a conservative approach from traders in the futures market.
The event highlights the changing narratives on the future journey of ETFs. Just last month, Bitcoin saw rapid gains as excitement poured into the event.
Right now, as open interest shows, the sentiment seems to be “wait and see,” with some putting the ETF's success rate at nearly 100%.
Van Straten notes that open interest is now nearing year-on-year lows, which is “particularly beneficial for Bitcoin.”
“However, the exchange rate is not uniform,” he admits.
“Deribit is currently the only popular exchange that sees high leverage. In contrast, Binance, a major player in the digital asset exchange platform, continued its downward trend, approaching the lowest level not seen since December 2022.
New BTC price drop?
Elsewhere, popular analyst and crypto social media analyst BitQuant said the enthusiasm surrounding the ETF is fading.
Related: ‘Natural Depression' Below $41.5K — 5 Things to Know in Bitcoin This Week
“The majority do not know that the Bitcoin ETF will be accepted in 22 days, and the rest of the minority do not believe that this will happen, even though Bitwise has made an announcement on it,” he said in part to the subscribers of X (formerly Twitter). Post on December 18th.
“It's a little true.”
Van Straten, for his part, ended with a word of warning.
“Historically, when the estimated leverage ratio (LR) has gone down, the price of Bitcoin has followed a downward trend,” he said.
“This pattern was observed at two critical times: in May 2021, during the Chinese mining ban, and in November 2022, after the FTX collapse. In these cases, the price of Bitcoin declines until a new local bottom is reached. This recurring sequence shows the relationship between LR declines and Bitcoin market price adjustments.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
