Bitcoin markets are acting like no ETF approval is even on the cards, let alone a reality, fresh analysis concludes.
BTC $42,635 is about to hit all-time lows in terms of leverage in what one analyst says is “quite remarkable.”
Despite being up nearly 200% year-to-date, BTC price strength is garnering little interest into the 2023 candle close, per data from on-chain analytics firm Glassnode.
Binance leads Bitcoin leverage drain
Bitcoin’s leverage ratio, as well as cash-margined and crypto-margined open interest, are firmly “muted” at current prices, with the former even on the cusp of hitting all-time lows.
This, says CryptoSlate research and data analyst James Van Straten suggests, is highly unusual — in just three weeks, the United States could approve the first Bitcoin spot price exchange-traded fund (ETF).
“Understanding critical metrics provides essential insights as the digital asset market constantly evolves. One such indicator, the Estimated Leverage Ratio (ELR), offers a glimpse into the market’s leverage and is noteworthy,” he wrote in a post on Dec. 19.
“Currently, the ELR is nearing historical lows—an occurrence witnessed only twice prior. This indicates a significant reduction in market leverage, implying a conservative approach from traders in the futures market.”
The phenomenon underscores shifting narratives over the prospective ETF go-ahead. Just last month, Bitcoin saw rapid gains as excitement over the event boiled over.
Now, as open interest also shows, the mood appears to be one of “wait and see,” while some have given the odds of an ETF success as being practically 100%.
Van Straten described open interest, now approaching year-to-date lows, as “particularly beneficial for Bitcoin.”
“The exchange landscape isn’t uniform, however,” he acknowledged.
“Deribit is the only prominent exchange currently observing significant leverage. Conversely, Binance, a major player in the digital asset exchange arena, continues its downward trend, nearing an unseen low since Dec. 2022.”
New BTC price downtrend?
Elsewhere, popular analyst and crypto social media commentator BitQuant was baffled by the fading enthusiasm around the ETF.
“The majority is not aware of Bitcoin ETF being accepted in 22 days, and the remaining minority doesn’t believe it will happen, even if Bitwise does a commercial on it,” he told subscribers on X (formerly Twitter) in part of a post on Dec. 18.
“It’s a bit surreal.”
Van Straten meanwhile finished with a word of warning.
“Historically, when the Estimated Leverage Ratio (ELR) bottoms out, it has been followed by a downward trend in Bitcoin’s value,” he noted.
“This pattern was observed during two critical periods: May 2021, amid China’s mining ban, and Nov. 2022, in the aftermath of the FTX collapse. On these occasions, Bitcoin’s value declined until it found a new local bottom. This recurring sequence suggests a correlation between ELR lows and Bitcoin market value adjustments.”
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