- The company noted that the ETF would not take place this month.
- Trader sentiment is moving from bullish to bearish.
After predicting that Bitcoin [BTC] would reach $50,000 by the end of January 2024, crypto services company Matrixport has released a report to explain why she no longer shares the same opinion.
According to Matrixport, the reason it changed its position is because the US SEC could approve any Bitcoin spot ETF this month.
In its January 2 statement, the institution noted that:
“While we have seen frequent meetings between ETF applicants and SEC staff that have resulted in applicants resubmitting their applications, we believe that all applications fail to meet a critical requirement that must be met before the SEC approval.”
Will development change the position?
Since the beginning of the year, crypto traders have shown optimism about an upcoming ETF approval. For many of them, the event (if positive) would send the Bitcoin price skyrocketing.
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 move toward Matrixport’s previous forecast. However, the company noted that most of the $14 billion deployed in long positions since September 2023 were at risk of liquidation.
Matrixport added that if the SEC does not approve any applications by January 5, all applications would be rejected. It also noted that initial approval could occur in the second quarter of 2024. The report stated:
“If there is any denial from the SEC, we could see cascading liquidations as we expect most of the $5.1 billion in additional perpetual Bitcoin futures to be settled. We could see Bitcoin prices drop -20% very quickly and fall back to the $36,000/$38,000 range.”
Shorts are prepared to flourish
As a result of this projection, AMBCrypto decided to take a look at Bitcoin’s Long/Short Ratio. From the data reviewed through Coinglass, it appears that traders had already given up hope of a positive ETF decision.
At the time of writing, the Long/Short ratio has fallen to 0.97%.
Source: Coinglass
If the measure is above 1, it means there are more open long positions than shorts. But since the Long/Short ratio was less than 1, it means that most traders are bearish on BTC’s price action.
We also looked at liquidation levels using Hyblock Capital. Liquidation levels are estimates of potential price levels at which liquidation events could occur. According to the chart below, shorts that are late in opening positions can be liquidated.
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This is because the CLLD rose in a negative direction. If the ETF is rejected, already open shorts could rise as a sharp decline could occur. However, major dips can be quickly filled as Bitcoin recovers.
Source: Hyblock Capital
Meanwhile, Matrixport noted that regardless of January’s decision, BTC would end the year higher:
“Even if the SEC were to deny the ETF, we still expect Bitcoin prices to be higher by the end of 2024 than when they started the year ($42,000), as US election years and Bitcoin mining years are generally positive”
