After hitting new all-time highs, it is common for the price of Bitcoin (BTC) to cool down a bit. in the form of profit taking, consolidation and uncertainty from traders wary of opening new positions at all-time highs. This seems to be exactly what happened this week, since Bitcoin price is struggling to keep the $ 60,000 level as support.
Overall, most analysts continue to take a bullish macro-interest rate view of Bitcoin price development., to the point where PlanB, Willy Woo, and others claim so the second half of the bull market was confirmed when the price hit $ 67,000 last week.
Here’s what analysts have to say about what might come next for the price of Bitcoin, along with some thoughts on the greater market momentum currently at play.
Bitcoin ETFs have “completely changed the structure of the market”
Much of the buzz that has surrounded Bitcoin trading for the past two weeks has centered on the launch of a BTC ETF. For years, analysts have helped the instrument’s approval enable a new level of access for institutional investors and officially cement the mainstream (or widespread) status of Bitcoin.
Now that two futures-based BTC ETFs have been launched, many companies have quickly proposed new ETFs. including the introduction of a leveraged Valkyrie ETF and a Direxion-inverse Bitcoin ETF that would allow speculators to sell the price of BTC.
The advent of these ETF options has “completely changed the structure of the market,” according to Ben Lilly., Market analyst and co-founder of Jarvis Labs, “as there are now tertiary derivatives in cryptocurrencies via spot access, CME futures, futures-based ETFs and options on ProShares Bitcoin Strategy ETF (BITO).”
This will create many arbitrage opportunities in the market, as they already exist with the CME spread. This spread will narrow over time as more desks allocate capital for Bitcoin strategies. Indeed, volatility will certainly compress in the future, as more capital is deployed as part of various strategies in the event of fluctuations.
According to Lilly, The main consequence of the introduction of BTC ETFs is that “more capital will flow into various forms of exposure to Bitcoin”. He also noted that “this process takes time” and that “spreads can persist until this new equilibrium is struck”.
Analysts expect an intense battle between bullish momentum and bearish momentum
One topic that hasn’t received much attention as part of the Bitcoin ETF rollout is how The method by which these products determine the price of BTC affects the actual spot price of BTC as well as the spread.
According to David Lifchitz, ExoAlpha’s Managing Partner and Chief Investment Officer, the “fair value premiums and discounts” applied to these products are likely to result in higher spreads between the specific Bitcoin ETF and the underlying spot price. “Because these other contracts also have a surcharge / discount that tends to get wider the further the contract expires.”
According to Liftitz:
If we add to this the cost of continuously rolling futures from month to month, which over time also weighs on the ETF’s value versus cash, we will end up with a total gamble that will not exactly follow the spot price of BTC, but simply correlates with it.
As for BTC’s price action, Noting the firm rejection at the $ 63,000 resistance level, Lifchitz noted that “the battle here is intense between bullish and bearish momentum”.
However, previous bearish momentum attempts to drop the price of BTC have been mild, bringing it to just $ 58,000 before bullish momentum pushed the price of BTC back up, we are holding our potential downside targets at $ 58,000 and $ 53,000 Future looking for resistance at USD 63,000 to become support for the next bullish leg. ”
Some expect a pullback into the $ 50,000 range
The independent market analyst expressed similar opinions Ryan Cantering Clark, who posted the following tweet explaining why he’s not investing in BTC for the time being.
This market feels kind of heavy. All the activity in the smaller projects and the failure of BTC and ETH at ATH feels like the canary in a coal mine.
This market tends to be momo-driven and is more likely to fall under its own weight than up.
For the time being completely from BTC.
to???? Ryan Cantering Clark (@CanteringClark) October 27, 2021
This market feels a little heavy. All the activity on the smaller projects and the failure of BTC and ETH at their all-time highs feels like the canary in the coal mine. This market tends to be momo driven and more likely to fall under its own weight than rise. I’m not going to invest in BTC for now.
In a follow-up tweet, Clark highlighted subordinate support areas to look out for and where a good start could be.
â € œIf it doesn’t stay at the $ 58,000 level, we will likely hit $ 50,000 again. So I’ll get involved there, or I’ll get involved higher up. If leverage can be removed from the system without the above conditions, great. This is my main concern at the moment. “
The global market cap of cryptocurrencies is now $ 2.452 trillion and the dominance rate of Bitcoin is 44.9%.
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