Earlier today, prominent pseudonymous crypto analyst McKenna shared insights on the potential market impact following the potential approval of spot bitcoin Exchange-Traded Funds (ETFs) in the U.S. in the coming year.
McKenna predicts a ‘sell the news’ event, where an asset’s price drops after a highly anticipated event materializes, as the event’s potential impact is often already priced in. He notes a significant increase in open interest for CME Bitcoin futures since BlackRock’s ETF filing on June 16th. CME Bitcoin futures are contracts traded on the Chicago Mercantile Exchange that allow investors to speculate on the future price of Bitcoin without holding the actual cryptocurrency. The rise in open interest, which represents the total number of unsettled contracts, suggests increased market participation and speculation.
The analyst suggests that these futures positions will likely be unwound, leading to a closure of contracts through selling. Additionally, he anticipates that investors who entered the market after the FTX insolvency will start reducing their risk, potentially triggering a market selloff.
McKenna forecasts a 20-30% market selloff, followed by Ethereum and its related assets outperforming in Q1 2024. This prediction is based on Ethereum’s strong positioning and the expected market dynamics post-selloff.
In response to his market outlook, McKenna has started taking profits while maintaining core long positions in OP and ARB. OP and ARB are the native tokens of layer-2 scaling solutions Optimism and Arbitrum, respectively. These platforms are designed to enhance Ethereum’s scalability and efficiency, making their tokens attractive investment options in the context of Ethereum’s anticipated performance.
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