Yesterday the market experienced its biggest liquidation event since the beginning of Bitcoin's uptrend in August and its largest altcoin liquidation event in 2 years. With 24 hours having passed, we are able to assess the aftermath and address some of the unsubstantiated pieces of news that may have been a contributing factor to this sell off.
Liquidations:
Below is a cross comparison of the cumulative liquidations for each respective day and time period:
This cross comparison reiterates the severity and speed at which the sell off occurred, with almost $500 million being liquidated in a 1 hour period yesterday.
Funding
Prior to the sell-off yesterday funding was elevated amongst majors, reaching north of 150% annualized on Bitcoin alone. Below is a chart illustrating the current funding rates as of today; showing a cooling off across the board.
Futures Basis
The 3 month futures basis for Bitcoin has also cooled off from nearly 25% to around 15%. This represents the spread between Bitcoin's spot price and 3 month futures.
Relevant Associated News:
The main news source under scrutiny yesterday was by a Matrixport analyst that published a piece suggesting the Bitcoin spot ETF would be rejected. As discussed yesterday, this piece was unsubstantiated conjecture and 24 hours later this has remained the case. Matrixport Co-founder Jihan Wu has since published a public statement:
In other news, Coindesk announced yesterday that: “Goldman Sachs Eyeing Bitcoin ETF Role Via BlackRock and Grayscale”
Goldman Sachs is reportedly engaging in discussions to become an authorised participant for the Bitcoin ETFs managed by Grayscale and Blackrock. This move would see them joining the ranks of JPMorgan, Jane Street, and Cantor Fitzgerald as Authorised Participants.
Lastly, it is noteworthy that tomorrow 01/05/2024 is the window for Spot Bitcoin ETFs until January 10th in which ARK 21Shares will have its final deadline for its spot Bitcoin ETF.
Conclusion
Following the largest altcoin liquidation event in two years and the biggest market-wide sell-off since August's uptrend, the aftermath reveals a normalisation in funding rates and a recovery in certain market sectors. The sell-off, which saw nearly $500 million liquidated in just one hour, was initially partially fueled by unsubstantiated news, notably a Matrixport analyst's speculative article on Bitcoin spot ETF rejection. However, this claim has not been substantiated 24 hours later. Meanwhile, Goldman Sachs is exploring a role in Bitcoin ETFs with Grayscale and BlackRock, aligning with other major players like JPMorgan, Jane Street, and Cantor Fitzgerald. Additionally, the upcoming deadline on January 5, 2024, for ARK 21Shares' spot Bitcoin ETF decision remains a significant date in the crypto market calendar.
Disclaimer: This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.