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Bitcoin Climbs Ahead of Upcoming Bitcoin ETF

Plus500 | Monday 18 October 2021

Bitcoin (BTCUSD) rose on Monday after slightly sinking over the weekend. The cryptocurrency was trading at approximately $62,000. Bitcoin hasn’t risen above the $60,000 level since April 2021. The rise may have been due to the anticipated U.S. Securities and Exchange Commission (SEC) approval for trading Bitcoin futures ETF which is expected to be finalised this week.

Bitcoin coins

Market watchers seem to be keeping a close eye on the $60,000 threshold as well as the April record high of $64,980. Back in April this year, Bitcoin hit a peak, which was followed by a classic selloff. Some believe that this could have been due to a drop in tech growth stocks. Crypto watchers may have bet there was indeed another period of uncertainty before the next rally presented, however, Bitcoin seems to be almost back.

Bitcoin has had an optimistic year so far, though it has shown some volatility. Possible reasons for the crypto’s volatility could be due to increasing institutional adoption of digital currencies and a growing asset-class maturity to a crypto crackdown in China. Other explanations include there are arguments that Bitcoin may be seen as an inflation hedge. Many Bitcoin investors regard the crypto as a protection against currency debasement. In addition, inflation estimates rose this year, then decreased, followed by another climb in the last few weeks. However, the Federal Reserve’s expectations for inflation have shifted, bringing a more aggressive tone than it was earlier this year. This means Bitcoin investors may be less concerned about dollar debasement.

Bitcoin Futures ETF Set for Approval 

Bitcoin may have had a volatile year, but what may really test the popular crypto, is the anticipated U.S. SEC approval for trading Bitcoin futures ETF, which is expected to be finalised this week.

Some investors may be wondering what they should know about the Bitcoin Futures ETF. A futures-based Bitcoin ETF tracks futures Bitcoin contracts, rather than Bitcoin’s price. Also, a futures-based Bitcoin ETF could potentially be more expensive than Bitcoin itself. This is due to some additional costs which come with future contracts. 

Ivory Johnson, certified financial planner, chartered financial consultant and founder of Delancey Wealth Management states that an ETF may require some middlemen in the initial investment, including hedge funds and dealing with ETF providers, which inturn, might benefit the middlemen more than the actual investors. This would especially be the case if the ETF trades at a premium during Bull markets.

Like with all trades with Bitcoin, crypto investors should always take into consideration that both Bitcoin and the Bitcoin futures ETF come with some risk of loss. Experts have viewed the new Bitcoin futures ETF as volatile, and speculative, therefore, have noted to carefully weigh potential risks and benefits. 

Bitcoin may have risen this morning after the news that Bitcoin futures ETF are set to be approved this week, but it remains uncertain whether the crypto will continue its uptrend after the anticipated approval is finalised or if it will sink.

This information is written by Plus500 Ltd. The information is provided for general purposes only, and does not take into account any personal circumstances or objectives. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. No representation or warranty is given as to the accuracy or completeness of this information. It does not constitute financial, investment or other advice on which you can rely. Any references to past performance, historical returns, future projections, and statistical forecasts are no guarantee of future returns or future performance. Plus500 will not be held responsible for any use that may be made of this information and for any consequences that may result from such use. Hence, any person acting based on this information does so at their own discretion. The information has not been prepared in accordance with legal requirements designed to promote the independence of investment research.

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