The crypto market is on alert in anticipation of the possible approval of Bitcoin Exchange Traded Funds (ETFs) in the United States.
Prominent pseudonymous crypto analyst McKenna has shared shocking insights on the likely scenario that will follow this approval.
I'm around 70-80% confident that the approval of filed Bitcoin spot ETFs will be a sell the news event.
Since BlackRock filed on June 16th open interest for CME BTC futures increased by +3.16B.
These positions need to unwind & think many who were buying post FTX insolvency will… pic.twitter.com/ClXqO2tdsy
— McKenna (@Crypto_McKenna) December 28, 2023
McKenna, with a 70-80% confidence level, predicts a “sell the news” event following the approval of Bitcoin ETFs.
He argues that the significant increase in Bitcoin futures open interest on the Chicago Mercantile Exchange (CME), since the introduction of the BlackRock ETF on June 16, is a key indicator.
Interest has increased by more than +3.16 billion, signaling intensified speculation and trading activity.
The analyst warns that these futures positions will have to be unwound, with the consequent closing of contracts through sales.
In addition, he predicts that many investors who entered the market after FTX’s insolvency will seek to reduce their risk, which could trigger a massive sell-off.
A possible market drop of 20-30% is estimated as a result of these movements with Bitcoin ETFs
However, McKenna projects outperformance of Ethereum and its related assets in the first quarter of 2024, based on Ethereum’s strong position and expected dynamics following the market decline.
In response to this outlook, McKenna has begun taking profits, selling some positions.
Strategically, though, it still holds fundamental long-term positions in tokens like OP and ARB, native to layer-2 scaling solutions like Optimism and Arbitrum.
These platforms seek to improve the scalability and efficiency of Ethereum, making them attractive as investments considering the possible performance of Ethereum in the near future.
From the increase in open interest in Bitcoin futures to the investment strategies of market participants, all of this for McKenna could trigger a possible correction scenario in the market.
This detailed view provides valuable insight for investors, who can adjust their strategies based on these projections and anticipated market movements.
