Analysts urge caution as Bitcoin ETF launches

Today, the 19th October, is the launch of ProShare’s Bitcoin Futures Exchange Traded Fund (ETF) on the NYSE. The company confirmed this on Monday with the SEC, which had given the go ahead a few days before. The fund is linked to bitcoin futures that are traded on the Chicago Mercantile Exchange.

ProShares was among a number of bitcoin ETFs considered by the SEC, with its Chairman Gary Gensler making it clear that funds linked to the futures market rather than the underlying asset were more likely to win regulatory approval.

News of long-awaited approval for a bitcoin-related ETF sent the world’s largest crypto by market value to levels not seen since April. Bitcoin rose above $60,000 for the first time in nearly six months on Friday, following the announcement, and it is hoped that the ETF launch will “open the floodgates to a stream of similar products winning regulatory approval and accelerating the flow of investments into crypto.”

Some analysts are talking up Bitcoin to reach $100,000 on the back of this, but others believe it will cause a sharp, short-term pullback, with some warning that the event could be another “buy the rumour, sell the news” event. It is also widely believed that additional ETFs will rollout over the coming week.

At the moment, bulls are busy defending the market against the bears, who are trying to pull the price back below $60,000. So far, the bulls are holding their ground in the $61,000-$62,000 zone.

Jordan Finneseth, writing for Cointelegraph, says: “According to some price path charts, there’s a chance that Bitcoin tops out below $68,000 in the next few months before heading lower to establish a higher low near $46,000.”

David Lifchitz, managing partner and chief investment officer at ExoAlpha suggests that a “small pullback might be in order,” but added that “the medium-term looks definitely higher.” However, he urges caution for ETF buyers, saying, “these Bitcoin ETFs based on CME futures to track BTC price will underperform Bitcoin spot price due to ongoing futures roll costs.”

Lifchitz also suggests that while ETFs are supposed to open up Bitcoin investing to more retail investors, it will in fact be the experienced traders who will benefit most. He said, So these ETFs will likely be an easy Bitcoin access to unsophisticated retail investors with their broker accounts, who will not get the full return of BTC after all fees are accounted for. These ETFs will also bring arbitrage opportunities for smart traders. Wall Street at its best.”

But there is good news for existing Bitcoin owners. One analyst suggested that BTC price has the potential to drop back to the $53,000 support in the near term before resuming its uptrend, and that uptrend could take it to $98,000.

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