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January 8, 2024

Bitcoin Bounces Back From Flash Crash As ETF Decision Time Draws Near

January 8, 2024

The final countdown is on to Bitcoin spot ETF decision time and price swings are becoming more volatile.

As we edge closer to the deadline of January 10th we witnessed Bitcoin prices dive to lows of $40,500 last week before rebounding back up towards yearly highs.

As anticipation surrounding Bitcoin ETFs heats up, Ethereum developers confirmed the dates for the Ethereum Blockchain’s next big upgrade, and the Bitcoin price chart is set to post the FIRST-EVER weekly Golden Cross event.

With the crypto market buzzing with activity, let’s dive in.

Bitcoin bounces back from flash crash

Mass panic ensued in the crypto markets last week as Bitcoin fell from yearly highs of $45,900 down to $40,500 over the subsequent 24 hours. 

A research report published by Matrixport on Wednesday surmised that the SEC was likely to deny all upcoming Bitcoin Spot ETF applications.

The resulting bearish price action was then amplified as billions of dollars worth of long positions were liquidated in an instant.

According to The Defiant, over $100 billion worth of positions were liquidated on January 3rd which caused the price of Bitcoin to fall over 4% in 1 hour.

Therefore, while the Matrixport report may have provided the initial trigger, other analysts, such as Alex Kruger pointed to the excessive leverage in the Bitcoin markets as the cause of the violent price move.

According to LookIntoBitcoin, the Bitcoin funding rates had never been as high.

Bitcoin Funding Rates between Jul 2022 and Jan 2024
Bitcoin Funding Rates between Jul 2022 and Jan 2024

However, since the flash crash, Bitcoin has climbed back above $44,000 and continues to show resilience in the face of Bitcoin Spot ETF uncertainty.

11 firms now in the frame for Bitcoin Spot ETF

Grayscale and financial services giant Fidelity are among the latest entities making significant strides in the final stages of their Bitcoin ETF proposals.

Late on Friday, the New York Stock Exchange filed a crucial 19b-4 document on behalf of Grayscale, indicating the firm’s advanced progress in launching a Bitcoin ETF. 

Notably, NYSE also submitted amendments for planned funds by Hashdex and Bitwise, underlining the growing interest in Bitcoin ETFs across various platforms. 

Simultaneously, Cboe BZX made amended 19b-4 filings for proposed spot Bitcoin ETFs by Ark and 21Shares, Invesco and Galaxy, WisdomTree, Fidelity, and Franklin Templeton. 

The final filing on Friday came from VanEck with its 19b-4 submission.

While the SEC has yet to approve the 19b-4 documents filed by NYSE and Cboe, Nasdaq had earlier submitted proposals for BlackRock and Valkyrie, awaiting regulatory decisions.

The looming deadline of January 10 is now crucial, especially for the planned spot Bitcoin fund by Ark Invest and 21Shares, however, market experts anticipate the SEC making decisions on multiple proposals by that date.

According to trades conducted on Polymarket, over 81% of participants now predict that the SEC will approve a Bitcoin Spot ETF by January 15th. 

Prediction of Bitcoin Spot ETF as per Polymarket bets
Prediction of Bitcoin Spot ETF as per Polymarket bets

 

 

Ethereum developers lock-in date for Dencun upgrade

In a recent All Core Devs Execution (ACDE) call on January 4, Ethereum developers finalized the deployment dates for Dencun’s testnet, unveiling an ambitious schedule. 

According to Go Ethereum, an Ethereum client provider, the testnet is set to kick off with a Goerli deployment on January 17, followed by Sepolia and Holesky on January 30 and February 7, respectively.

The next ACDE call on January 18 allows for adjustments based on observations and any necessary changes following the Goerli fork.

Dencun promises a significant reduction in transaction fees for Layer-2 rollups by implementing EIP-4844, also known as proto-danksharding. 

This upgrade will replace calldata with less gas-intensive blobs, enhancing data availability on Layer-2s.

Looking beyond Dencun, the Ethereum community is already contemplating the next upgrade, Pectra, which will introduce Verkle Trees.

This data structure aims to make the network stateless, eliminating the need for clients to store Ethereum’s entire state history to validate blocks.

Vitalik Buterin, Ethereum’s co-founder, highlighted the potential of Verkle Trees at the Ethereum Community Conference in July 2022. 

Also known as “The Verge,” this innovation is expected to significantly enhance network decentralization by reducing the hardware requirements for becoming a validator.

Go Ethereum indicated that the development of Verkle Trees might extend beyond 12 months, which could mean delaying the live launch of Pectra in 2024. 

According to ultrasound.money, despite the excitement regarding the Ethereum upgrade, the supply of Ethereum increased over the last 7 days due to the downturn in trading associated with the end-of-year holiday period.

Ethereum supply over last 7 days 
Ethereum supply over last 7 days 

 

 

First ever Bitcoin weekly golden cross

The first ever weekly golden cross on the Bitcoin price chart is set to take place over the next week and is seen as an incredibly bullish technical signal by many who follow technical analysis techniques.

Typically, a golden cross occurs when the 50-day moving average crosses above the 200-day moving average.

However, this technical signal has never occurred with the 50-week moving average and the 200-week moving average due to the length of time frame that is required.

As a weekly golden cross is now on the cards, it has drawn the attention of the crypto community.

The 200-week moving average made headlines in early 2023 when the spot price of Bitcoin fell below it for the first time ever. 

However, throughout the remainder of 2023, Bitcoin spot prices have shown strength which is why the 50-week moving average is now beginning to climb back above. 

The fact that this is happening during a week when we may, or may not, see Bitcoin Spot ETF approval has sent the market into a buzz of activity. 

1 week BTC/USD chart highlighting the weekly golden cross signal
1 week BTC/USD chart highlighting the weekly golden cross signal

 

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