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Bitcoin nears all-time high after BITO's successful debut

Fawad Razaqzada Fawad Razaqzada 20/10/2021
Bitcoin nears all-time high after BITO's successful debut Bitcoin nears all-time high after BITO's successful debut
Bitcoin nears all-time high after BITO's successful debut Fawad Razaqzada
All eyes will be on Bitcoin after it continued to buck the trend and rose further on Tuesday to close in on its old record high at $64,900 that was hit back in April, while other cryptos either held in consolidation or fell. Bitcoin has been surging higher in recent days due, mainly, to the hype surrounding the launch of the first ever Bitcoin-linked ETF, which made its debut on Tuesday.
 
BITO, the ProShares ETF, became the second-most heavily traded fund on record as more than 24 million shares changed hands on the first day of trading. BITO finished almost 5% higher on its first day and will be in focus again later as the market gauges investor appetite for exposure to Bitcoin.
 
They key question for Bitcoin and crypto traders is what does BITO’s successful debut mean for the underlying Bitcoin prices. The way BITO is structured, there won’t be any direct investing in the popular cryptocurrency itself. Instead, the ETF is backed by Bitcoin futures contracts, those that are traded on the CME.
 
Therefore, BITO by itself won’t introduce any new demand for bitcoin directly. But indirectly, it will do so via the futures, as the seller must sell the underlying Bitcoin to the buyer at the set price and date. Some traders’ strategies may also require them to buy more bitcoins to hedge against the futures price, while arbitragers will be busy buying and selling to take advantage of any short-term pricing disparities.
 
With Bitcoin going up in the days leading up to BITO’s debut, there is a possibility that the impact of the ETF’s launch might already be priced in, and we could see some “buy-the-rumour, sell-the-fact” type of reaction in the days ahead.
 
 
That being said, the current trend for Bitcoin appears very strong and the fact that so many ETF shares exchanged hands to finish well in the black on the first day points to strong interest for Bitcoin exposure. So, sentiment towards Bitcoin should remain positive even if we may see some short-term weakness.  As a result, Bitcoin could easily break the old record high, before potentially climbing towards $70K next, which is the next psychological hurdle.
 
 
However, in the event of a potential false break out above the old record high, investors would need to proceed with extra care, especially if Bitcoin then goes on to make a lower low.

BitcoinSource: ThinkMarkets and TradingView.com
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Meet our contributors
Fawad Razaqzada
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Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Kearabilwe
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Kearabilwe Nonyana
Market Analyst, South Africa

Kearabilwe is an experienced Sales trader and Analyst specialising in Equity and Equity derivatives. His career in the financial markets has seen him hold various positions in global investment banks and global CFD and Spread betting firms. He has deep interest in using quantitative methods to help him understand and teach the fundamental drivers of asset prices.
 
 
 

Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Kearabilwe
Kearabilwe Nonyana
Kearabilwe is an experienced Sales trader and Analyst specialising in Equity and Equity derivatives.

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Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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