Bitcoin Eyes All-Time High as U.S. SEC approves Bitcoin Future ETFs
By Chibuike Osigwe
• Bitcoin maintains its bullish run with over 40 percent return from October and 11.3% this past week.
• Crypto traders remain confident as underlying on-chain fundamentals continue to paint a bullish picture for Bitcoin, following a leverage and futures premiums increase in derivatives markets.
• All eyes on ProShares as it sets to launch trading of bitcoin Exchange-Traded Fund (ETF) futures this week after a positive nod by the U.S. SEC.
It’s been a very good month for cryptocurrencies, especially bitcoin, as positive developments help push bitcoin price to over $60,000 since last week. There have been positive sentiments too in the market with a lot of investors confident that bitcoin price will likely reach or surpass its $63, 854 all time high very soon.
Going back to the beginning of the year, the market has been profitable to longer term investors or traders holding the coin as it opened by $29,374 thereby returning over 107 percent year-to-date. Following an impressive rally from the September lows, the market has managed to hold onto the gains whilst on-chain or fundamental activity surges higher.
Technical Analysis and Price Action indicates that Bitcoin has been trading above the 50 and 200 day moving-averages since the beginning of October, indicating a bullish signal in the long term. October’s gain is over 40 percent and lots of traders believe that the price will continue to trend upwards unless there is pullback which can plunge the price. The dip is also possible at the moment as the price tends to move around the $61,506 resistance zone.
Fundamental analyses or on-chain analyses of bitcoin are also showing an uptrend signal. The supply held by long-term holders is showing no signs of slowing down. During the 2021 low in April, 10.91 million bitcoins were distributed by long-term holders from October 2020 through to March 2021, and over 2.37 million bitcoins have migrated across the short-to-long term holders. This is according to Glassnode Insight, a leading online data platform for on-chain or crypto fundamental analysis.
Leverage Creeps Back
The positive sentiment and constructive price action was also reflected in derivatives markets with climbing open interest, healthy contango in futures markets (where the futures price of a commodity is higher than the spot price) and rising perpetual swap funding rates. According to Glassnode Insight, Futures open interest has risen by $5.6 billion (+45%) since the price lows in September.
The Options markets which are also seeing an expansion in open interest, rising by $3.6 billion (+64 percent) through October so far, leading to the recent short squeeze for short-bitcoin traders. This created a high demand for long positions in the market with short-bitcoin traders liquidating their positions. This of course can be attributed to the high surge in Bitcoin Price. Options markets still represent a relatively small portion of trade volume (< $1 billion typical). However their growth reflects a maturity of the market, providing new avenues for hedging of risk, tools for miners and traders to capture volatility premiums, and a tool for price speculation.
There is no heresy that the crypto market is highly speculative as positive developments can drive the price of coins to an uptrend. The Security and Exchange Commission (SEC) approved bitcoin exchange-traded fund futures on Friday after years of trial and error by some ETFs providers. The price of bitcoin jumped around $1,000 within minutes in late afternoon trading on Friday after the U.S. SEC Office of Investor Education and Advocacy tweeted about investing in funds that hold bitcoin futures. Leading ETFs Provider ProShares is expected to begin trade offerings for bitcoin ETF futures imminently. Other ETFs providers like Ark and BlockFi are also expected to join soon.
On the other hand, Russian President Vladimir Putin said that he accepted crypto’s role in making payment. Cryptocurrency “has the right to exist and can be used as a means of payment,” he said in an interview with CNBC posted last week on the Kremlin website . This was received with good sentiments by traders as it opens a new door for crypto space in Europe.
Cryptocurrency markets including Bitcoin are also seeing recovery from China’s crackdown as Miners are relocating to Europe, Canada and the U.S. where there is high acceptance of cryptocurrencies, with the U.S. being the largest abode.
Chibuike Osigwe is an Abuja-based data analyst.