How does Bitcoin ETF bring Bitcoin to new ATH?

Over the past week, Bitcoin has continued to outperform all of the top 10 cryptocurrencies with the exception of DOT. The fourth quarter sparked some big gains for the top coin as the price has been nearly 50% higher since early October.

Bitcoin dominance is also closing just below 50% and is about to hit a 3-month high at the time of going to press. Much of the recent dominance and price growth can be traced back to the predictions of Bitcoin Exchange Traded Funds (ETF). When the US Securities and Exchange Commission finally approved the first Bitcoin ETF, BTC comfortably hit over $ 60,000.

Acceptance process Bitcoin ETF

After repeatedly denying and suspending applications over the past 4 years, the SEC has finally given the go-ahead for the ProShares Bitcoin Strategy ETF, which is slated to hit the market next week. The company’s ETF will be tied to Bitcoin futures rather than spot prices, but the approval marks a landmark decision for the crypto space.

One of the main differences between a futures ETF and a “physical” ETF is that an investor cannot withdraw BTC from the fund for arbitrage purposes. Since Bitcoin futures are also often in the form of a contango (contango – valued higher than the spot market), high costs and downward pressure can arise. While there are many complications, the market’s predictions from price action that underscore these issues don’t seem that important at the moment.

A predictable trend in October is that the Bitcoin price and the “Bitcoin ETF” search trend will rise at the same time.

Bitcoin ETF search trend (green) vs. price (black) | The source: IntoTheBlock

In fact, data from IntoTheBlock’s BTC social indexes shows that the correlation between the trend of searching for “Bitcoin ETF” on Google and the price of BTC has increased to 0.91. This proves the very close relationship between them.

BILLIONCorrelation between search trends “Bitcoin ETF“ and price BTC | The source: IntoTheBlock

The effects of the ETF hype became even more apparent when the centralized exchanges saw strong buying activity following Bloomberg’s news that the SEC was not rejecting ETFs. Side-by-side trading for BTC has revealed some interesting patterns. This indicator aggregates the number of buyers based on whether they are buying or selling. In the hours following the October 15 news, Taker bought over 750 BTC in 1 minute on 3 different occasions in just over 3 hours as the average volume increased more than 20 times in minutes.

Bitcoin soars

Since the top coin looks pretty bullish on the daily chart, the highest value reached in the last 24 hours is $ 62,728. While BTC is set for another ATH, bearish cases are still common in the market.

One of the strong signs that the current price is not making all-time highs, however, is in Bitcoin’s real HODL ratio. This market indicator is calculated by taking the ratio between 1 week and 1 to 2 year real cap HODL bands. In addition, it increases supply by weighting the overall market age. While the high price at the time of writing indicates an overheated market, its value is still below the ATH 6 months ago when BTC hit $ 53,000. That means BTC still has time to grow.

Bitcoin Real HODL course | The source: Glass knot

The total fees spent on both BTC and ETH over the last week therefore show that the fees for the two largest coins have increased by double digits, which shows the increasing demand for transactions on their blockchain with prices increasing. All in all, for BTC, it looks like ATH will be back soon.

Lack of “physical” ETF trust authorized

The SEC will begin next month deciding the fate of “physical” ETFs.

Futures-based ETFs were received with mixed ratings for their impact on the market and the overall impact on Bitcoin price action.

“We’re not sure if these futures ETFs will be able to attract enough new money to trigger the exponential gains from Q4 2020. We expect investor cash flow to switch from gold ETFs to BTC. However, with BTC over $ 60,000 and market cap over $ 1.1 trillion, it will be a long time before a big change is made, ”crypto trading firm QCP Capital said in the release of its latest market updates.

QCP points out that the nature of futures ETFs means that the products will appeal to more retail investors than institutions, so most of the potential inflows into Bitcoin will be spent on physical products.

These things are likely to go on for a long time, however, and investors are flocking to existing Canadian and European physical Bitcoin ETFs instead of waiting for a move from the SEC and Chairman Gary Gensler.

“We suspect that after Gensler indirectly ruled out a physical BTC ETF in the US in the near future, investors who may have access to overseas markets will choose to get in there rather than investing in a contract ETF in the US . “

Bitcoin Futures Open Interest | Source: Bybt

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Minh Anh

According to AZCoin News

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