• 17 July, 2024
Market News

Matrixport’s ETF Analysis Under Scrutiny: Unpacking Criticisms and Market Realities

In the tumultuous beginning of 2024, the crypto market experienced a staggering setback on January 3, resulting in massive amount in liquidations across the board. Coinglass data reported liquidations totaling nearly $600 million, while the overall open interest dwindled from $18.66 billion to $17.72 billion.

Matrixport’s research played a pivotal role, hinting at a looming ETF rejection. This sudden nosedive wiped nearly $1 billion in open interest within a few hours, highlighting the volatility inherent in the cryptocurrency ecosystem.

Matrixport, a prominent digital asset company, fueled the market turmoil with a blog post titled “Why the SEC will reject all Bitcoin spot ETFs,” authored by Markus Thielen, the Head of Research at Matrixport. Thielen’s analysis pointed to a critical requirement missing in the filed ETFs, suggesting a potential delay in approval until the second quarter of 2024. The research highlighted the dominance of Democrats within the five-person voting Commissioners leadership critical for SEC approval, with Chair Gensler showing reluctance towards crypto in the US.

In response to Matrixport’s analysis, the crypto community witnessed a notable tweet from Alex Thorn, questioning the credibility of Matrixport’s claims. Thorn highlighted three key points, challenging Matrixport’s arguments, including the assertion that Franklin Templeton’s ETF filing kicked off the bull run. The tweet emphasized that several other major players had already filed ETFs, casting doubt on Matrixport’s narrative.

Bitcoin (BTC) faced a significant price correction in the wake of the crypto market crash, plummeting to $43,200.71, representing a notable -4.59% change in the last 24 hours. The market cap also experienced a parallel decline, contracting by -4.51% to $846,173,511,850. This downward movement reflected the broader bearish sentiment triggered by Matrixport’s warning on potential delays in SEC approval for Bitcoin spot ETFs.

The substantial drop in Bitcoin’s price contributed to a spike in trading volume, reaching $47,061,674,837 in the last 24 hours. This surge in trading activity, accounting for 47.84% of the total market volume, indicated heightened market participation during the tumultuous period. Additionally, the Volume/Market cap ratio, standing at 5.56%, hinted at the increased liquidity and trading interest relative to Bitcoin’s market capitalization.

The market’s immediate response to Matrixport’s revelation was a sharp decline in Bitcoin’s price, plummeting from $45,308 to $41,454, triggering an 8.51% drop. Analysts pointed to the massive reduction in the estimated leverage ratio as a potential risk mitigation strategy, hinting at a bottom formation in the market. The aftermath of the crash showcased the delicate balance between risk and opportunity in the crypto landscape.

As the dust settled, attention turned to the 365-day Market Value to Realized Value (MVRV) ratio, standing at 33.15%. This metric indicated that 33.15% of investors who purchased BTC over the past year were in profits. Analysts raised concerns that if these investors decided to capitalize on their gains, it could catalyze another market crash.

In conclusion, the crypto market’s rollercoaster ride in early 2024, triggered by Matrixport’s insights and the looming specter of ETF rejections, exemplifies the inherent unpredictability of the digital asset landscape. Investors now face the challenge of navigating this uncertainty while keeping a keen eye on the intricate interplay between regulatory decisions, market sentiment, and technical indicators.

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