Here’s why analysts say a Bitcoin ETF could mess up the structure of the market
After hitting an all-time high, it is common for Bitcoin (BTC) price to cool off in the form of profit-taking, consolidation and uncertainty from cautious traders about opening new positions in the region. This seems to be exactly what is happening this week as Bitcoin price struggles to hold $ 60,000 as support.
All in all, most analysts still have a bullish macro view of Bitcoin’s price action, to the point where PlanB, Willy Woo, and others claim the second half of the bull market was confirmed by price last week Reached $ 67,000.
Here’s what analysts have to say about what could happen next for Bitcoin price, along with some glimpses of the greater market momentum that’s happening right now.
Bitcoin ETF has “completely changed the structure of the market”
Much of the hype about the Bitcoin price in recent weeks has centered on the introduction of a BTC ETF. Analysts have been advocating for years that the approval of the instrument enables a new level of access for institutional investors and officially consolidates the status of Bitcoin as “mainstream”.
Now that two ETFs based on BTC futures have hit the market, many companies have rushed to propose new ETFs, including a leveraged ETF profile from Valkyrie and an inverted Bitcoin ETF from Direxion, which allows speculators to prevent price manipulation from BTC for sale.
According to Ben Lilly, market analyst and co-founder of Jarvis Labs, the advent of these ETF options has “completely changed the structure of the market” as there are now third tier derivatives on the market – futures, futures ETF based and options based on ProShares Bitcoin Strategy ETF (BITO). “
“This will create a lot of arbitrage opportunities in the market that already exist in CME arbitrage. This spread will decrease over time as more tables are allocated for Bitcoin strategies. Indeed, volatility will decrease as with any volatility more capital is deployed as part of different strategies. “
According to Lilly, the main benefit of introducing the BTC ETF is that “more capital will flow into more forms of Bitcoin exposure”. He also notes that “this process takes time” and that “disparities can exist until this new balance is struck”.
Analysts expect an intense battle between bulls and bears
One topic that hasn’t received much attention in the Bitcoin ETF implementation landscape is the method by which these products determine the price of BTC and affects the actual spot price of BTC as well as the spread.
According to David Lifchitz, managing partner and chief investment officer at ExoAlpha, the “mark-ups and discounts to fair value” applied to these products are likely to result in wider spreads between the particular Bitcoin ETF and the underlying spot price, “as do these others Contracts “. have a surcharge / discount that tends to expand the further the contract expires ”.
“On top of that, there is the cost of constantly introducing futures contracts from month to month, which over time also affects the value of the ETF relative to the spot, and you end up with a grand total. The spot price of BTC is not closely tracked, but “just correlate it!” “
As for the BTC price action, Lifchitz pointed to the company’s disapproval at the $ 63,000 resistance, noting that “the battle here between bulls and bears is intense”.
“However, previous bears’ attempts to lower BTC have been fairly mild, falling to just $ 58,000 before the bulls hit back … so we are holding our short-term potential downside targets at around $ 58,000 and $ 53,000 and looking for resistance at $ 63,000 to become support for the next leg. “
Related: Bitcoin price decreased compared to October 2017, BTC boom forecast before 2022
Some expect a pullback to the lows of $ 50,000
The independent market analyst Ryan Cantering Clark sees it similarly.
This market feels pretty heavy. All activities in smaller projects and the failure of BTC and ETH at ATH is like a canary in a coal mine.
This market tends to be driven and to fall below its own weight rather than ranking higher.
Currently from BTC.
– Ryan Cantering Clark (@CanteringClark) October 27, 2021
In a follow-up tweet, Clark marked subordinate support areas to which one should pay attention and which could be a good start.
“If $ 58,000 isn’t held, we will likely revisit the low $ 50,000. So I’ll either join there or higher. If the lever can be removed from the system without the above conditions, great. That is my main concern at the moment. “
The total crypto market cap is $ 2.452 trillion and the dominance of Bitcoin is 44.9%.