Bitcoin, along with the broader crypto markets, has encountered its initial downturn in 2024. Amidst the frenzy surrounding ETFs, BTC experienced a decline to $42.2K, eliciting diverse reactions among traders. Nevertheless, amidst this volatility, a positive outcome emerges, as this dip has propelled Bitcoin to its highest trading volume level since March 17th. There’s an anticipation that daily trading could surpass year-high levels in the next few hours.
Data analytics platform Santiment reported that BTC’s initial sell-off triggered a mix of panic sales and dip buys on exchanges, leading to a surge in BTC volume. A closer analysis reveals that traders engaged in leveraging, resulting in the liquidation of margin longs and restoring the funding rate to normal levels. Despite this, Santiment suggests that the funding rate still reflects a prevailing sense of fear among investors.
The approximately 8% dip in BTC is attributed to market concerns revolving around the approval of spot ETF applications. This uncertainty led to the liquidation of positions valued at $500 million across derivatives exchanges. With the arrival of 2024, a year highly anticipated for ETF approvals, Matrixport, a crypto financial services platform, garnered attention with intense debates and controversial reports.
Matrixport expressed skepticism, stating, “We believe all applications fall short of a critical requirement that must be met before the SEC approves. This might be fulfilled by Q2 2024, but we expect the SEC to reject all proposals in January.” While some critics argue that the Matrixport research report fueled fear, others attribute the market correction to the flushing out of leverage due to excessively high BTC funding rates.
Goldman Sachs Enters Bitcoin ETF Space
Amidst the debates, U.S. lawyer and Bitcoin advocate Carlasare downplayed the report, emphasizing that BTC’s sell-off was not triggered by a report on ETF denial but rather due to a natural market correction and the need for liquidity.
In a noteworthy development, Goldman Sachs is reportedly in discussions to become an authorized participant [AP] for proposed Bitcoin ETFs by BlackRock and Grayscale, contingent upon SEC approval. This marks a significant shift as major U.S. banks, traditionally cautious about direct involvement in cryptocurrencies, are now exploring the Bitcoin ETF space. The move is seen as a strategic adoption of a cash-based mechanism, deemed crucial for gaining SEC endorsement. While Goldman Sachs has yet to officially comment on this development, its potential involvement signals a growing mainstream financial interest in crypto ETFs.