11 Oktober 2021

Market Opening: The vacuum that Bitcoin creates

Patrick Heusser

Patrick Heusser

Head of Trading bei Crypto Finance (Brokerage) AG

Über den Autor

Here’s the thing about the current setup: if you’re NOT long bitcoin, you can only lose…

I think the current structure is a frontrunning of the potential ETF approval in the US. Initially, we saw it through spot buying (no change in funding on the perps), and then, at the end of last week, the funding started to tick higher led by the CME bitcoin futures front contract.

We anticipated that the funding over this weekend would remain elevated due to the extra day on the back of Columbus Day.

Altcoins stood completely still, except for a few exceptions, e.g. SHIB, ATOM, and DOT. This is the vacuum that bitcoin creates when it starts marching higher. It sucks in all of the liquidity, and leaves no air for other coins. The twist: in the event that there is no ETF approval in the near future, bitcoin will move lower, but altcoins will most probably outperform on the downside.

There is a good side to all of this, I believe…

It could end up leading to one of those days where you need to take out your shopping list and buy those altcoins you really like (and did research on). The way retail flow works is that it will always overshoot on both sides. In traditional finance, you would talk about overshooting the fair value mark, but that is hard to gauge in crypto. Altcoins  in particular get smacked around hard due to low liquidity and the fact that they are driven predominately by retailers.

I have no feeling for (or indication of) what the odds are for an ETF approval this year (or even this month). I am also not sure how much is already priced in. But in case you see bitcoin coming down due to an ETF announcement, quickly start looking out for your favourite altcoins.