Introduction:
The onset of 2024 brought unexpected turbulence in the cryptocurrency market, marked by the first major crash on January 3. With approximately $600 million in liquidations, this plunge was predominantly instigated by Matrixport’s research hinting at a potential rejection of Bitcoin ETFs. Let’s delve into the details of this significant market event and explore what lies ahead.
The Matrixport Influence:
Matrixport’s blog post, titled “Why the SEC will reject all Bitcoin spot ETFs,” authored by Markus Thielen, the Head of Research at Matrixport, played a pivotal role in triggering the crypto market downturn.
The post highlighted a crucial requirement missing in the filed ETFs, indicating a probable delay in SEC approval until the second quarter of 2024. The research also pointed out the dominance of Democrats in the current SEC leadership, expressing skepticism about Chair Gensler’s favorable stance towards crypto approval.
Anticipated Market Impact:
Matrixport’s research suggested a potential wipeout of $5.1 billion in longs, resulting from the expected ETF approval delay. The theoretical consequence of this move could lead to a 20% drop in Bitcoin prices, ranging from $36,000 to $38,000.
Immediate Aftermath of the Crypto Crash:
The crypto market witnessed a rapid decline in Bitcoin prices from $45,308 to $41,454, representing an 8.51% drop. Coinglass data revealed liquidations amounting to nearly $600 million, accompanied by a slump in total open interest from $18.66 billion to $17.72 billion.
Impact on Leverage:
The estimated leverage ratio, calculated as the exchange’s open interest divided by their coin reserve, plummeted from a peak of 0.23 to 0.17. This 50% reduction in leverage suggests a decrease in risk and implies a potential formation of a market bottom.
Speculations on Future Market Trends:
The 365-day Market Value to Realized Value (MVRV) ratio currently stands at 33.15%, indicating that a third of investors who purchased BTC over the past year are in profit. Potential profit-taking by these investors might catalyze another market crash. Matrixport’s forecast of an SEC rejection until Q2 2024 raises concerns, suggesting a scenario where BTC could revisit the $30,000 level and potentially bottom out around $24,800.
Conclusion:
As the crypto market navigates through the aftermath of the first crash in 2024, the interplay of Matrixport’s insights and market dynamics becomes crucial. Investors remain on high alert, awaiting further developments and potential impacts on Bitcoin prices as the crypto landscape continues to evolve.
Source: Cryptonews.net
