Research Summary
The report discusses the bullish sentiment in the cryptocurrency market, particularly Bitcoin, due to the upcoming ETF verdict. It also highlights the role of institutional traders in the derivatives market, the futures premium disparity between ETH and BTC, and the impact of news on market volatility. The report further analyzes the likelihood of the SEC’s decision on the ETF and suggests a strategy of aggressive Bitcoin accumulation in November.
Key Takeaways
Bullish Sentiment in November
- ETF Verdict Anticipation: The market is bullish due to the upcoming ETF verdict, expected in nine weeks. This anticipation is driving the market sentiment and influencing trading behaviors.
- Institutional Traders’ Role: Institutional traders are providing significant heat in the derivatives market. CME traders are more exposed than ever before, and they are confidently long and strong, according to futures premiums.
ETH and BTC Futures Premium Disparity
- ETH’s Strengthening Momentum: Despite trading at 2-year lows after a tough October, ETH has seen strengthening momentum. The futures premium disparity between ETH and BTC on CME has normalized, favoring a re-rotation into ETH again at 0.053 ETHBTC.
Impact of News on Market Volatility
- News-Driven Trading: In the past half year, crypto traders have primarily traded based on news, particularly ETF news. This has led to unpredictable and irrational bursts of volatility. A lack of news leads to a lack of volatility, as observed throughout the summer.
Probability of ETF Approval
- SEC’s Decision Anticipation: The SEC will give a final verdict to ARK 21Shares by January 10. The report suggests a 50% likelihood of a verdict in the final week (Jan 3-Jan 10), a 20% likelihood of an ETF approval in the coming 5 weeks, and a 30% likelihood for an ETF verdict in the two weeks leading into the Holiday season.
Actionable Insights
- Aggressive Bitcoin Accumulation: While most of the market is waiting for news to trade, November represents a solid month for aggressive accumulation of Bitcoin. The report suggests an extended plan to distribute, reduce exposure, and reallocate to alts once the ETF verdict is out.
- Monitoring ETH’s Momentum: With the futures premium disparity between ETH and BTC normalizing, it may be beneficial to monitor ETH’s momentum for potential re-rotation opportunities.
- Preparation for ETF Verdict: Given the various probabilities of the ETF verdict, it is crucial to prepare for different outcomes and adjust trading strategies accordingly.
