- Open interest on perpetual swaps declined 12% between Jan 2-6 as leverage was reduced, making the market more stable for ETF approval.
- Proposed spot Bitcoin ETF fees are very low, between 0.20-0.30%, reducing selling pressure after launch.
- Volatile price action is still expected this week as traders react to the imminent ETF approval decision that’s expected by Jan 10.
Last week’s leverage shakeout has improved market conditions, making a post-approval sell-off less likely according to analysts.
Open Interest Declines Reduce Risk of Cascading Liquidations
Perpetual swap open interest saw a 12% decline between Jan 2 and Jan 6 as frothy leverage was purged from the market. Funding rates have since stabilized at neutral levels, indicating the market is more robust.
Meanwhile, open interest on CME hit an all-time high, but premiums remain in a healthier uptrend than at the start of the year. The analysts expect CME volumes to decline as trading rotates into the new spot ETFs.
Fees on Spot Bitcoin ETFs Extremely Competitive
Multiple issuers have filed amended prospectuses in the past week, with extremely low fees compared to similar products.
Bitwise leads with no fees for 6 months or until $1B AUM, then just 0.20% – the lowest proposed fee. Ark21Shares, VanEck, and others are between 0.20%-0.30%. Even Grayscale reduced its proposed fee from 2% to 1.5%.
Lower fees reduce selling pressure, as the ETFs need to liquidate less BTC to cover their costs.
High Anticipation Around the Imminent ETF Approvals
A decision is expected by Jan 10, and trading could begin as soon as the next day after approval. Analysts caution this week will likely see volatile price action as traders quickly react to the news.
While approval is widely expected, the analysts say this week is still one to pay close attention, as volumes and risk appetites shift rapidly around the long-awaited spot ETF verdict.
