Kaiko, a leading source of cryptocurrency market data, analytics, indices, and research reports spot Bitcoin ETF anticipation is believed to cause even more volatility in the market.
— Kaiko (@KaikoData) January 8, 2024Last week markets suffered a flash crash causing millions in liquidations.
However, days before, the market already showed signs of wobbling.
Our latest analysis explores what happened and how #ETF anticipation could cause more volatility 👇
https://t.co/8yK3xaRQXv
According to the Jan. 8 report, Bitcoin (BTC) and the broader market experienced a sudden downturn in the first week of January, with analysts attributing the retreat to speculation surrounding the potential denial of a spot ETF. However, according to the report preceding the abrupt market decline, there were indications of instability.
An often overlooked metric, price slippage, which denotes the variance between the anticipated price at the time of a market order and the actual execution price, serves as an insightful indicator. The Kaiko analysis illustrates the average slippage for a hypothetical $10,000 market order on major platforms such as Binance, Coinbase, and Kraken.
In the days leading up to the market downturn, slippage exhibited customary fluctuations. However, on Jan. 2, it surpassed 0.02% and persisted at that level for over a day, implying a deterioration in liquidity even as prices lingered in the $45,000 range.
The approaching Jan. 10th deadline signifies the SEC’s final day to reach a decision regarding ARK 21Shares’ spot ETF. Regardless of the outcome, Kaiko states that the market will likely witness heightened volatility.