Bitcoin (BTC) ETF Hopes Boost Price Rally
Bitcoin (BTC) broke above the $62,000 barrier over the weekend, propped by news of an imminent futures-based ETF. The fund was proposed by ProShares Trust, in a recent conditional filing to the US Securities and Exchange Commission. Trading is set to start on October 18, based on the prospectus filing, barring deliberate activity from the US SEC.
The news of a BTC-based ETF has boosted market prices in the past. The chief rationale was that the ETF would diminish the supply of readily available coins. However, the ProShares ETF will be based on BTC futures prices, and while it would expose more traders to the risk, it would not increase actual BTC ownership in self-custody.
Over the past days, another ETF was proposed to launch the Valkyrie Bitcoin Strategy ETF, once again as a filing for immediate listing.
New Week Starts with Rapid Price Action
After slightly dipping to just below $60,000, BTC continued its upward trek on Monday. BTC moved up to $62,338.02 in early European trading hours, with the potential to react to US business hours later in the day. BTC is also moving on expectations of repeating its all-time high and setting new records in the near future.
The recent price rally happened over relatively thin volumes of $31B in the past few days, suggesting more active trading may keep boosting the prices.
The ETF news will keep affecting the market in the short term, while it becomes more probable the US SEC will not oppose the intentions to launch the products.
So far, the SEC has shot down most ETF launches, citing high risk of volatility. The SEC was also wary of using “blockchain” in various ETF products, to avoid misleading and risky products.
In the case of an ETF arrival, BTC may continue its usual price moves, as scarcity and futures risk-taking is mostly dependent on purely crypto-based exchanges.
BTC Markets Return to Derivative Trading
Open interest is growing for BTC futures, suggesting a return to the hype levels from the second quarter of 2021. Trader behavior suggests expectations of $100,000 prices during the current quarter.
The rally to just under $60,000 was driven by spot BTC buying, with notable holding behavior. Glassnode data note more than 186,000 BTC were held through fluctuations. At current prices, more than 99% of BTC buyers are in the money.
Long-term holders, based on unmoved coins, are locking in about 70% of the supply. Not all wallets can be traced to individuals, and the holding behavior includes retail buyers, miners, as well as exchange wallets and wallets for DeFi collaterals. The DeFi space is one of the sources of BTC accumulation, where coins are building up value without cashing out to fiat.
BTC May Face New Tether (USDT) Problems
During the latest rally, the Tether (USDT) stablecoin saw a price anomaly, trading below its dollar peg at $0.99. This would translate into a higher BTC price in USDT. For now, US-based pairs are trading at a very small discount, with the Kraken BTC pair at $62,333.
The supply of USDT expanded over the past week, adding more than 300M tokens over the weekend.
In the past days, Tether, Inc. settled with the US Commodities Futures Trading Commission for previous misleading statements on the backing of each stablecoin. USDT is supposedly backed by a mix of assets and notes.
USDT still makes up more than 87% of all dollar-pegged stablecoin activity, and is included in the most active and liquid BTC futures pairings. Despite attacks on USDT, the asset has served to boost liquidity on BTC and other crypto coin markets.
BTC Bears Lose Footing
BTC sentiment shifted to Extreme Greed, or 78 points based on the Crypto Fear and Greed Index. Similar levels were last seen in May, when BTC was hovering near its all-time high of $64,000. Over the weekend, the Index briefly touched 79 points, suggesting more risk-taking, adding to the data for rapidly rising leverage.
With the increasing open interest for BTC futures, liquidations have affected both short and long positions. BTC remains volatile, causing long liquidations after dipping toward $59,000 briefly. Over the past week, Binance futures liquidations showed an uptick in volumes, suggesting more risk-taking on the market.
The expectation for the coming days is to see more short liquidations. Based on Bybt data, more than 71% of Binance liquidations are for short positions.
BTC Switches to Dominance Leader
Despite dramatic short-term rallies for altcoins, BTC remains the more dominant asset. BTC expanded its relative value to above 46.1% of the crypto market capitalization, from just 40% a month ago.
Smaller altcoins are actually shedding value, diminishing their relative dominance from above 20% to around 18%. So far, both ETH and altcoin prices remain stagnant as most attention shifts to BTC price moves and an attempt at an all-time high.
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