Bitcoin price made a new all-time high in October, which will likely go down in history as Bitcoin ETF season. During the historic month, the first ever cryptocurrency surged as the United States Securities and Exchange Commission approved the first ever US Bitcoin ETF.
The month includes proposals from other like-companies who are seeking to provide investors with widespread exposure to such an exchange-traded product. Here is a recap of everything that went down during Bitcoin ETF season in 2021.
The First Bitcoin ETF Debuts In The US
The ProShares Bitcoin Strategy ETF (BITO) is the first US-based “Bitcoin-linked ETF” to be approved in the country by the SEC – a regulatory branch of the government that’s recently received a bad reputation around the cryptocurrency industry.
But what exactly does Bitcoin-linked mean? According to the company, the fund does not invest directly in Bitcoin, and instead provides “capital appreciation primarily through managed exposure to bitcoin futures contracts.”
ProShare promotes the ETF as “an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way.”
What this means is that investors aren’t necessarily gaining exposure to Bitcoin, but Bitcoin price action using futures contracts, said to be primarily from the Chicago Mercantile Exchange otherwise known as CME.
The debut of the ProShares Bitcoin ETF instantly caused CME futures open interest to spike to a new all-time high, and Bitcoin spot price set new records shortly after launch. Speculation leading up to the approval helped to push Bitcoin back into the $50,000 range, and in just days a new all-time high was set above $65,000.
Bitcoin Sets New All-Time High, Double Top Theories Begin
Because of all the fresh positions and related leverage that was opened that day, Bitcoin price immediately corrected and is back below its former all-time high set back in April. Bitcoin bears, pundits, and naysayers have come out in full force to warn of a dangerous double top pattern.
A double top is measured from the peak to the neckline support at the bottom, which when broken through projects a move that matches the depth from resistance to support. The target for such a move would put Bitcoin price back at around $12,000, which is highly unlikely given all the recent support, notably a Bitcoin ETF approval.
Higher time frame technical analysis shows that the bull run is nowhere near finished in cryptocurrencies, and the new all-time high was an all-clear signal to the world to buy back in. On-chain analysis shows that BTC reserves on exchanges are at the lowest levels in years, supporting a possible supply shock in the next several months.
Bitcoin bubbles also tend to peak in December according to the last two market cycles, and this latest Bitcoin ETF fever could soon turn into full blown FOMO and Bitcoin mania.
Will The Real Bitcoin Top Be This December?
Interestingly, December being a time for tops and bottoms in Bitcoin is only one seasonal signal to note. Buying in October is essentially the opposite of selling in May and going away, with only one half of the year offering strong enough performance to stay invested. Data shows that markets work this way with chilling accuracy and recurrence, yet few are expecting a peak in cryptocurrencies this holiday season.
Investors might not see it coming, but institutions sure do. Participation from institutions is higher than ever, demonstrated by CME open interest at all-time highs, the emergence of a Bitcoin ETF, and many more on the way.
The Valkyrie Bitcoin Strategy ETF was also given the greenlight by the SEC, and began trading shortly after the ProShares debut, albeit to much less excitement and price action. And next, the VanEck Bitcoin Strategy ETF also went live, to further decreasing buzz.
But that doesn’t mean the lack of buzz will translate to lack of price appreciation in Bitcoin. The current correction, as noted, was needed to reset the market and cleanse much of the leverage recently opened, before Bitcoin could try for new highs. With this now in the rear view, what’s ahead of Bitcoin?
The Difference Between Spot And Futures-Based ETFs
More ETF approvals are on the way, but at this point they may have lost their luster. Part of the enthusiasm might have been due to the expectation that a Bitcoin ETF would have led to increased BTC spot buying, driving up the price. It did, but not because of the ETF itself. Because ProShares gives investors exposure through futures, no physical BTC is ever delivered.
A spot-based Bitcoin ETF is more what investors would be excited about again if approved. Grayscale has filed to turn its Bitcoin Trust into a spot-based Bitcoin ETF. A spot ETF would theoretically need to absorb supply from the market, while also allowing demand to grow by increasing accessibility.
Such a situation could send the current supply shock into overdrive, which already suggests there is an extreme shortage of coins on exchanges currently. With sellers having already sold their BTC at below $60,000, the more likely direction is up at this point. Could Bitcoin price reach the targets that analysts have been preaching for what feels like years now? Is $100,000 BTC really in the near future?
Be Profitable No Matter The Direction With PrimeXBT
It is impossible to tell for sure, which is why today Bitcoin remains a speculative asset. Even the SEC only approved a futures-based Bitcoin ETF. Other ways to speculate over Bitcoin price action, includes CFD trading, options, and more.
Beyond Bitcoin ETFs, investors and traders can also gain exposure to BTC, ETH, USDT, or USDC-based contracts on cryptocurrencies, forex, commodities, stock indices, and more from a single, secure account, protected by bank grade security infrastructure. Long and short positions offer traders full control over global markets, no matter which direction they trend in next.
Using the advanced trading tools provided, along with the built-in technical analysis software, it won’t matter if it is a Bitcoin bull run or a crypto market correction, you can still be profitable with PrimeXBT.