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The ETF Expectation During a Slow Weekend: Crypto Market Overview - January 6, 2024

ETF remains in the spotlight

No topic has captured more attention in recent weeks than the highly anticipated approval of ETFs. The fate of this financial product holds the key to determining the market's trajectory, with speculations running rampant. Former BitMex CEO Arthur Hayes warns of a potential classic "buy the rumor, sell the news" scenario, suggesting that once the ETF approval occurs, the market might experience a significant cooldown. On the flip side, individuals like John Bollinger, the creator of Bollinger Bands, a staple trading indicator, are optimistic, anticipating a Bitcoin rally that could propel the entire market forward. The anticipation and diverse viewpoints surrounding the ETF decision contribute to the current buzz and uncertainty within the crypto community.

Amidst the current buzz surrounding the impending ETF decision, our outlook remains cautiously bearish for the near term, aligning with the "sell the news scenario." However, we differ from Hayes's prediction of a double-digit drop, at least in the upcoming weeks. Recognizing the potential influence of well-informed market participants, often referred to as the 'big boys,' who likely strategically acquired Bitcoin and Ethereum, fueling the recent rally, we anticipate a correction. These seasoned investors may be poised to 'buy the dip' when the market adjusts. For those actively involved in crypto trading, prioritizing robust risk management becomes paramount.

The market pauses in anticipation


Crypto Market Heatmap. Source: Coin360

As is often the case, the cryptocurrency market exhibited limited activity over the weekend, with more pronounced volatility anticipated as Monday unfolds. The total market capitalization experienced a modest 0.54% increase, reaching $1.67 trillion. Concurrently, trading volume witnessed a 17% decline, totaling $367.6 billion, indicative of a relatively sluggish weekend. The gainers/losers ratio stands at 44-to-56, once again reinforcing the market's stagnation. The Fear & Greed Index, registering at 70 with a 2-point decrease from yesterday, continues to reflect a prevailing bullish sentiment. As the new week begins, the market awaits potential shifts in dynamics after a subdued weekend.

The Altcoin Season Index maintains its position at 59, consistent with yesterday's level, while Bitcoin dominance experienced a marginal 0.29% uptick, reaching 51.61%. This modest shift in Bitcoin dominance is understandable, given the heightened anticipation surrounding the Bitcoin ETF. We anticipate the market to retain a sense of calm until Monday when some selling activity may unfold