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ETF hopes power Bitcoin over $59,000
With the news Bitcoin exchange traded funds could be about to land in the US, BTC intensifies its upswing.
Bitcoin bounces on positive SEC noise
Reports from Bloomberg indicate that the SEC would be in favour of approving at least some Bitcoin ETFs.
The SEC is reviewing 40 Bitcoin exchange traded funds right now. It is believed that the commission will approve at least some of these. That would make any new ETFs the first of their kind in the United States.
The news filled crypto traders with renewed confidence this morning, sending BTC prices soaring. Prices nudged the $60,000 mark with highs of $59,931 registered on Thursday. At the time of writing, BTC was trading for $59,395.
Bitcoin Futures passed $60,000 this morning before falling back to around $59,650. Both BTC and futures are up over 3% on the day.
If the SEC approves a Bitcoin ETF it will be the first of its kind in the US. Previously, commissions in places like Brazil, Canada, and Europe had given the green light to crypto exchange traded funds.
So, who is making the applications? Bloomberg mentioned ProShares and Invesco and two frontrunners who may see their applications approved next week.
Valkyrie, VanEck and Galaxy Digital Funds have all made ETF applications this year too.
The Bloomberg report said that ProShares and Invesco’s proposals are based on futures contracts. They were reportedly filed under mutual fund rules that SEC Chair Gary Gensler has said provide “significant investor protections”.
Gensler helped boost Bitcoin prices last week when it was reported that he said the SEC had no plans to launch a crypto ban. His comments came in the wake of a move by the People’s Bank of China that made digital token transactions illegal in China.
That said, Gensler had previously stated he believes that the crypto market could encourage price manipulation and expose millions of investors to significant risk.
However, this time Gensler and the SEC’s actions appear to have instilled high confidence in crypto traders.
Other tokens have been brought up by the Bitcoin surge. This is a regular occurrence. When Bitcoin is up, certain coins tend to perform well, and vice versa. Ethereum, for example, reached $3,855 after Bloomberg’s report was published.
Eight consecutive weeks of inflows for the crypto market
Data from digital asset managers CoinShare said cryptocurrency products attracted $226.2m in investments for the week ending October 8th. Fittingly, that marked the eighth consecutive week for inflows across the digital token sector.
Across that eight weeks, the total invested came to $638m. The overall figure for the year-to-date is $6.3bn.
Big business, but, with the global digital currency sector worth over $2 trillion, we knew that already.
No prizes for guessing which coin attracted the most attention. Yep, it was bitcoin. CoinShare says the world’s most popular token attracted $225m during the review period. Unlike other cryptocurrencies, Bitcoin has only had four consecutive weeks of sustained inbound investment.
Ethereum saw minor outflows totalling $14 million. While still the world’s second most valuable token by capex, ETH continues to lose ground to the Bitcoin behemoth. Altcoins such as Solana and Cardano posted inflows of $12.5 million and $3 million.
Litecoin, Ripple and Polkadot all posted outflows.
Bitcoin signals fight back after clearing $55,000
Bitcoin staged an impressive rally yesterday, gaining more than 10% in trading. What’s behind this latest BTC surge? We take a look.
BTC reaches $55,000
It was good news for Bitcoin traders last night when the world’s most popular cryptocurrency cleared $55,000 for the first time since May.
The token bounced on the news that billionaire George Soros’ hedge fund confirmed it is trading BTC.
Bitcoin reached a five-month high of $55,499 last night. It has fallen back to around $54,680, but bulls believe it’s only a matter of time before BTC reaches a new all-time high. Its highest levels were reached in April 2021, when Bitcoin broke above $64,000 for the first time.
Whenever Bitcoin moves it usually takes other tokens with it. This is true today. Ether, for instance, is trading up nearly 1% at $3,594, while Cardano is showing similar growth of 1.10%. Cardano is now trading for $2.26.
It appears the China crypto crackdown has not had the effect that bears were bracing for. Beijing has ruled all cryptocurrency transactions as illegal and is doing its utmost to stamp out mining and trading operations across China.
However, it seems Bitcoin is showing new levels of resilience to potentially damaging external factors.
Extra support for Bitcoin
In addition to the Soros Fund’s Bitcoin backing, a number of other institutions, organisations, and even a country potentially, are helping support the token.
For instance, Reuters reports that the Bank of America Corp published its first research coverage focused on cryptocurrencies and other digital assets on Monday. Additionally, US Bancorp has launched a new crypto-focussed service for private fund managers in the US and Cayman Islands.
“Investor interest in cryptocurrency and demand from our fund services clients have grown strongly over the last few years,” said Gunjan Kedia, Vice Chair of US Bank Wealth Management and Investment Services in a news release. “Our fund and institutional custody clients have accelerated their plans to offer cryptocurrency.”
We’ve also had reports from the SEC that it doesn’t plan to ban cryptos at all. Chairman Gary Gensler was grilled by the Senate on Tuesday if the Securities and Exchange Commission would be mirroring China’s recent harsh actions. The answer was an emphatic no. It’s really for Congress to decide, according to Gensler.
Federal Reserve Chairman Jerome Powell recently also said the Fed has no intention of implementing a crypto ban either.
Regulation will likely be the name of the game. We just don’t know when it’s going to land, but for now digital token trading and investing is still A-OK in the US of A.
Bitcoin might even become currency in Brazil if comments made by Federal Deputy Aureo Riberio on Tuesday are anything to go by.
Riberio said in an interview with local media Brazilians could soon be able to use Bitcoin to buy houses, cars, and even fast food. Bill 2.303/15, which regulates cryptocurrencies, might approve the legal use of the asset, similar to El Salvador.
Not everyone is convinced by digital tokens
This new wave of digital finance fever has been tempered somewhat by a few important dissenting voices.
At the start of the week, we saw one of South Africa’s top hedge fund managers, Jean-Pierre Verster of Protea Capital Management, compare Bitcoin to a Ponzi scheme.
Now, JPMorgan CEO Jamie Dimon has spoken out against Bitcoin.
Dimon was interviewed on HBO’s Axios on Monday when he was asked if BTC is the “fool’s gold of the future?”.
The JPMorgan Boss replied: “It’s got no intrinsic value, and regulators are going to regulate the hell out of it.”
Dimon went on to say: “You can call it a security or an asset or something like that, but if people are using it for tax avoidance and sex trafficking and ransomware, it’s going to be regulated, whether you like it or not. So, it’s not a moral statement. It’s a factual statement.”
Several prominent finance figures have made their anti-Bitcoin stance very clear. Christine Largarde of the European Central Bank and Bank of England Governor Andrew Bailey have all spoken out against digital tokens.
Even Jerome Powell, who as mentioned above said the Fed has no plans to ban crypto transactions in the US any time soon, has mirrored Dimon’s comments in the past.
Despite its CEO’s feelings, JPMorgan currently offers six crypto funds for its customers.
Cryptocurrency update: Institutions ride correction into Bitcoin
More institutional investors entered the crypto world last March, helping support a sector some are still reluctant to back.
Wood suggests Bitcoin correction tempted institutions into crypto
Founder and CEO of ARK Investment Management Cathie Wood has said March’s cryptocurrency market correction was a buy signal for institutional investors.
Referencing on-chain analysis undertaken by ARK researchers and data from crypto research firm Chainalysis, Wood said institutions moved money into Bitcoin during this time.
According to Chainalysis, large institutional trading transactions, i.e., those transactions above $10 million, accounted for over 60% of decentralised finance (DeFi) market movements in Q2 2021. In Q3 2020, the share was more like 20%.
Institutions now hold close to $70bn in Bitcoin, according to research from Buy Bitcoin Worldwide. $40.1bn of that total is controlled by BTC asset managers. Of thee, Greyscale is the largest digital asset manager, holding around $31bn in the world’s most popular cryptocurrency.
Greyscale itself is an important vehicle for institutional-level investors looking for crypto exposure. It’s also interesting that Cathie Wood flagged how such investors made a move into digital tokens in March. She was very likely one of them. Wood’s own ARK Investment Management is the largest shareholder in the Greyscale Bitcoin Trust with a $350 million stake of 9 million shares.
Bitcoin itself broke above $50,000 for the first time in months last week. At the time of writing, it was trading for around $47,412, down some 2.76% on the day. The coin is eyeing support at $49,000.
We’ve seen plenty of institutional-level support from moneyed investors for BTC and other tokens across the past year. However, some are not so convinced of cryptocurrency’s validity as an investment vehicle.
Paulson goes hard on Bitcoin
Billionaire investor John Paulson has fired a few harsh words Bitcoin’s way.
Paulson, who gained notoriety as a subprime shorter back in 2008, has stated that cryptocurrency’s inherent volatility would put him off from “even shorting it”.
Speaking in an interview with Bloomberg, Paulson said Bitcoin and digital tokens are not an ideal store of value since they are a “limited supply of nothing”, and hold “no intrinsic value”.
Paulson went even further. The investor said he would not recommend investing in digital tokens to anyone.
“Cryptocurrencies, regardless of where they’re trading today, will eventually prove to be worthless,” Paulson told Bloomberg. “Once the exuberance wears off, or liquidity dries up, they will go to zero.”
So, what does Paulson recommend investors put their cash into? The old standby gold. The talk of Bitcoin becoming the new “digital gold” has been floating around the markets for a while now, but many investors still prefer gold as a store of wealth over its upstart rival.
Some investors prefer the physical nature of gold, plus its inherent value, as making it a stable value store over cryptocurrencies.
Expecting increasing inflation to result in the metal appreciating thanks to it being regarded as a safe haven asset, Paulson heavily supports gold.
On-chain metrics could spell the return of BTC & ETH bull run
Despite Poulson’s protestations, there is a growing belief that Bitcoin and Ethereum could be about to stage another bull market surge.
Glassnode, a crypto and blockchain analytics firm, has said there is a tremendous crossover with today’s on-chain metrics and those seen in mid-to-late 2020 when cryptocurrencies began a fresh surge.
“As the Bitcoin and wider cryptocurrency market rallies higher, a remarkable on-chain divergence continues to form across both Bitcoin and Ethereum,” Glassnode’s latest Week-on-Chain report states.
“On-chain activity on both chains has remained quiet relative to bull market highs, even as price momentum continues upwards, and bullish trends in supply dynamics remain in play.”
Indicators that a new bull run is on the way are currently observable, including higher network participation and record transaction values.
Active entities on the Bitcoin blockchain are particularly noteworthy. Despite prices being near $50,000, these are still one-third below all-time highs but growing rapidly.
“It is notable that current activity on both chains is similar to the stable pre-bull accumulation range established in mid to late 2020,” Glassnode said.
“Whilst the divergence between price and on-chain activity is historically abnormal for a full-scale bull market, it is not an uncommon signature for the pre-bull, and pre-supply-squeeze dynamic,” the report continues. “These periods often accompany the end of bear market accumulation where the investors who remain, are the strong hands, those with the highest conviction.”