January 8 REX Wire Market Outlook

The Bitcoin spot ETF will be a game changer, and there is enormous speculation over how it will play out.

Will the BTC ETF be everything the crypto world hoped for?

It's Monday, and it's going to be a big week for Bitcoin, one way or the other.

At some point in the next three days, the SEC will approve or (far less likely) deny a series of spot BTC ETFs. Based on the signals coming from the SEC and ETF providers, confidence has been building, and since the end of last week, analysts who understand the process of approval have been calling it a done deal.

Before we dive into how the crypto markets are digesting this monumental development, we'll take our regular look at the macro background and TradFi markets.

Employment Stays Strong

NFP came in hot on Friday. Payroll gains were 216,000 against the forecast 175,000, though earlier months were revised downwards. Unemployment remained at 3.7%, rather than the expected 3.8%. Wages, also forecast to remain steady at 0.3% m/m and 3.9% y/y, were up 0.4% month-on-month.

The strong employment figures reduce the odds of a March interest rate cut, though for now, the market's expectation is still for a quarter-point reduction.

Meanwhile the DXY may have put in another lower high at 103 (tbc), suggesting that the three-month downtrend might still be intact and 100 will soon come into play.

Major indices including the S&P500, NASDAQ, and Dow Jones have corrected a little, though the Dow is well above its prior all-time high. Gold, too, remains comfortably above its old all-time high, looking at weekly closes.

Regardless of the short term, the trajectory seems to be set. Analyst Timothy Peterson reminds his followers that fiat debasement is inevitable, and accelerating.

Dollar Devaluation: The Race To The Bottom
Every fiat currency has died. The only question is, how long will it take?

And this, of course, has implications for hard assets, such as Bitcoin.

Bitcoin

Following a new local high close to $46,000 last week, bitcoin crashed nearly 10% on Wednesday, before recovering the majority of its losses and stabilizing. Over the weekend, BTC has reclaimed $44,000, following a series of higher lows.

Bitcoin Dominance is back around 54%,close to its December highs, signaling some rotation of alts back into BTC. Caitlin Cook makes a strong case on just how positive ETF approval would be in the long term, but the market remains eerily calm given that, very soon, potentially the largest liquidity event of Bitcoin's history will occur.

Another interesting factor is that the majority of TradFi advisors don't appear to believe an ETF will be approved this year, suggesting a mismatch between mainstream expectations and reality.

This doesn't mean the next few weeks will be "up only". An increasing number of analysts are pointing to overbought conditions and bullish exhaustion, the likelihood of bitcoin putting in a significant correction, and potentially a "sell the news" reaction to approval. While the last year has seen several periods of correction and consolidation, BTC has not put in one of the 30-40% crashes that regularly feature in the course of a bull market.

Looking slightly further out, BitMEX CEO Arthur Hayes is eyeing early March for some dramatic downside volatility, due to the machinations of the Federal Reserve and Treasury Department.


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