Will the Bitcoin ETF work ?
Bitcoin has been soaring since the start of October, 2021. After having gained more than 30% in the first week of October alone, the bullish run for the biggest cryptocurrency in the world has continued, pushing it to new highs. With the official confirmation of the Bitcoin Futures ETF launch, the cryptocurrency has been trading at $63K and rumours suggest a massive breakout to $168K.
But is the deployment of the new ETF actually something that will help the crypto platform, or is it just unnecessary hype which has led to short-term gains ?
Bitcoin reaches $63K
For the first time since April of this year, Bitcoin has reached the $63K mark. While most altcoins have marked small losses in the past week, Bitcoin remains the big whale in a sea full of fish. BTC was trading at $57,000 on October 15th before it shot up to above $60,000 and surprisingly approached $63,000 just a day after that.
Despite a short-term price dip, with the confirmation of some ground-breaking news in the crypto field, we can expect Bitcoin to reach an all-time high in the coming days.
Confirmation of BTC ETF
The first ever Bitcoin futures ETF will be released on the New York Stock Exchange (NYSE) on Tuesday, 19th October. The rumoured release was finally confirmed by the SEC, as the ProShares ETF will provide exposure to bitcoin futures contracts — agreements to buy or sell the asset later for an agreed-upon price, rather than bitcoin itself. The ProShares Bitcoin Strategy ETF has started trading under the ticker symbol ‘$BITO’ and was released with a valuation of $40. After reaching the $42 mark, it is trading at $40.88 as of the end of 19th October.
While the demand for this particular asset has eventually allowed BTC to cross $60K, many financial advisors are advising investors to be cautious of the trade before they add Bitcoin futures to their portfolios.
Benefits of the ETF
But others have only positive remarks about the ETF adoption. “The ETF presents a disruption to what is available in the marketplace today,” said Karan Sood, CEO and managing director of Cboe Vest, a financial advisory platform in McLean, Virginia. “That’s what investors are excited about.”
At present, financial advisors might purchase bitcoin through advanced money trades, however there are wellbeing worries as some stress over programmers or losing purported private keys, which give admittance to their resources.
Another choice, bitcoin trusts, offer a simpler way of adding bitcoin to portfolios through business or retirement accounts. In any case, these resources might accompany higher charges and qualities may not reflect the advanced cash value changes.
According to the digital assets management company CoinShares, the following could be the benefits of the ETF approval. ‘The ETF approval could prompt further significant inflows in the coming weeks as U.S investors begin to add positions’. This will make the most widely traded cryptocurrency available to most investors who have a brokerage account.
Another news that broke out recently on twitter has to do with the Bitcoin all-time high price being hit in a Japanese exchange. Preston Pysh, a crypto investor and an investment podcaster took to twitter to reveal news of a new BTC ATH. On one Japanese exchange, BTC reportedly hit the price of $70,000:
The Risks Involved With The ETF
Although the assets may have an “exceptionally high connection” with bitcoin, the resource will not reflect upsides of the advanced money since it tracks the cost of future agreements, and not the actual crypto token itself. Additionally, it costs more to possess assets over individual resources. However, “some investors are willing to pay more for an ETF’s institutional level liquidity, custody and execution” versus managing the currency themselves”, said Sood.
Jordan Benold, a partner at Benold Financial Planning in Prosper Texas, is another candidate who believes that putting a highly volatile digital asset like Bitcoin, with futures is a big gamble. “It’s just the ultimate risk you would ever take”, says Benold. While it is clear that some investors are making out the ETF to sound like nothing more than a high-stakes poker battle, the truth about Bitcoin is that it functions like any other asset. This ETF will be a great opportunity to stabilise the coin in the long-run, which can have a positive impact on its volatility.
BTC To $100K And Beyond
Although the crypto market is highly volatile and prices can fall up and down at any given minute, most investors and analysts are suggesting a huge upside trend for the biggest crypto in the world. So the question remains, when will we see BTC peak?
These kinds of predictions obviously arise whenever BTC is enjoying an upside trend, but many financial institutions have come up with even bigger predictions.
BTC to $168K ?
According to Tom Lee, the head of research at FSInsight, Bitcoin will see a rapid increase in its valuation as the momentum continues after the confirmation of the first BTC ETF on 18th October.
The 10 biggest ETF dispatches saw inflows of $14 billion in their initial experience by and large. The best was the Nasdaq 100 ETF in 1999, with inflows of $36 billion. FSInsight expects interest for ProShares’ Bitcoin Strategy ETF to outperform that of Nasdaq 100 ET and estimates inflows of more than $50 billion.
The new ETF, which starts exchanging on the New York Stock Exchange this week, will likewise permit a lot more financial backers to dispense crypto, which will bring about huge new inflows, which will bring about value gains, FSInsight says.
FSInsight gauges that bitcoin’s day by day request will increase by $50 million because of ETF inflows and if the square prize is $10 million every day, the “balance cost to clear this, in light of investigation by our information science group, equates to $168,000 .”
This goes to show that the deployment of the new BTC ETF has positively affected the market. But, the other side of the debate believes that the ETF will be short-lived, especially since it does not trade with actual Bitcoin.