- The company noted that the ETF would not take place this month.
- Trader sentiment changes from bullish to bearish.
After predicting that Bitcoin [BTC] By the end of January 2024, crypto services firm Matrixport has released a report explaining why it no longer holds the same view.
According to Matrixport, Matrixport has changed its stance because the US Securities and Exchange Commission (SEC) could approve any Bitcoin spot ETF this month.
In its statement released on January 2, the institution noted the following:
“While we have seen frequent meetings between ETF applicants and SEC staff, resulting in applicants resubmitting their applications, we believe that all applications fail to meet a critical requirement that must be met before the SEC will approve. “
Will attitudes change as a result of developments?
Since the beginning of the year, crypto traders have been optimistic about impending ETF approval. For many of them, the event (if positive) would cause the Bitcoin price to skyrocket.
However, previous articles from AMBCrypto indicated that people familiar with the matter were at a crossroads regarding the SEC's decision.
On New Year’s Day, BTC reached $45,000. The increase indicated a positive development towards Matrixport's previous forecast. However, the firm noted that most of the $14 billion invested in long positions since September 2023 could be liquidated.
Matrixport added that if the SEC does not approve an application by January 5, all applications will be rejected. It also noted that the first approval could come in the second quarter of 2024. The report states:
“Should the SEC deny this, there could be cascading unwinds as we expect the majority of the $5.1 billion in additional Bitcoin futures to be settled with the long perpetual position. We could see Bitcoin prices decline by -20% very quickly and fall back to the $36,000/$38,000 area.”
Shorts are primed to succeed
As a result of this forecast, AMBCrypto decided to check Bitcoin’s long/short ratio. The data evaluated via Coinglass shows that traders have already given up hope of a positive ETF decision.
At the time of this writing, the long/short ratio had fallen to 0.97%.
Source: Coinglass
If the ratio is above 1, it means that there are more open long positions than short positions. However, since the long/short ratio was less than 1, it means that most traders are bearish on BTC price action.
We also looked at liquidation levels using Hyblock Capital. Liquidation levels are estimates of potential price levels at which liquidation events may occur. According to the chart below, short sellers who open their positions late may potentially be liquidated.
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This is because CLLD saw a rise in the negative direction. If the ETF is rejected, already open shorts can win as there could be a sharp decline. However, major dips could be quickly erased as Bitcoin recovers.
Source: Hyblock Capital
Meanwhile, Matrixport noted that BTC would end the year in positive territory regardless of January's decision:
“Even if the SEC rejects the ETF, we still expect Bitcoin prices to be higher by the end of 2024 than they were at the beginning of the year ($42,000) due to US election years and Bitcoin mining Years tend to be positive.”
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