Bitcoin on the rise fueled by ETF news

13 Dec 2023 | 3 min read
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In the last two years, cryptos have received a black eye many times. The biggest blows to the reputation of cryptos were the fall of the FTX exchange and Binance's problems with the US financial regulator, and there are plenty of smaller cases. Over the past year, the mainstream has declared on several occasions that Bitcoin and other cryptos are dead. Despite this, Bitcoin's return this year is more than 130 percent, and from the local bottom at the end of 2022, it has bounced more than 150 percent.

Of course, from the peaks of around $69,000 in 2021, Bitcoin collapsed over the course of the last year by almost 80 percent to around $15,000.

The volatility of Bitcoin certainly scares the investor, but for the trader it opens up opportunities.

Bitcoin (in USD), one year daily chart

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Source: Bloomberg 13.12.2023. Price in US dollars. Historical returns are not a reliable indicator of future returns.

Bitcoin (in USD), five year weekly chart

Source: Bloomberg 13.12.2023. Price in US dollars. Historical returns are not a reliable indicator of future returns

ETF launch in January?

Bitcoiners have long been waiting for a spot Bitcoin ETF like the rising moon. An ETF based on Bitcoin futures was already launched in 2021, but an ETF based on the spot price of Bitcoin, i.e. the market price, could be more important than an ETF based on futures. This would make it possible to invest Bitcoin without worrying about their storage, and trading would be done conveniently through a stock broker on the world's largest stock exchanges at the market price of Bitcoin.

However, the US financial regulator SEC has taken its time in approving Bitcoin spot ETFs.

Bitcoin's recent rally is largely a result of the much-anticipated launch of an ETF. Forbes urges in their article to mark January 5-10 in the calendar. SEC filings cite these days as the ETF's potential approval window. ETF applications have been submitted by, among others, Blackrock and Fidelity. All spot Bitcoin ETF applicants have a total of $17 trillion in assets under management, so it's not a case of small boutiques.

It is possible that the long-awaited spot ETF approval will not happen in the mentioned time window yet. However, according to analysts cited by Forbes, the probability of this is less than 10 percent.

Pantera Capital's Dan Morehead predicts “the worst kept secret”, i.e. ETF approval, significantly affects the price of Bitcoin. He expects the approval to be a "buy the rumor, sell the news" event, meaning Morehead expects the ETF approval to be a selling point for Bitcoin traders.

The price of Bitcoin at the beginning of October is on the rise by about 50 percent, so buyers of the ETF rumors have been found in the market.

Whether approval comes in January or later, Bitcoin's strong price movements are unlikely to be a case of history just yet. For traders, this means an opportunity to make a profit. On the other hand, these strong movement can also result in losses, depending on market timing.

Vontobel offers leveraged products based on Bitcoin futures in the trader's toolbox, and when trading them, you also don't have to worry about the risks associated with storing Bitcoin. With Vontobel's leveraged products, traders can trade the products’ on the stock exchange just like stocks.

MFL BTC1 with V146-Mini Future the trader can aim for a return on the rising rate of the Bitcoin future. At the time of writing, it offers 4.81x leverage on Bitcoin futures movements. If the Bitcoin future increases by one percent, the value of the leveraged product increases by 4.81 percent. As the price of Bitcoin futures decreases by one percent, the leveraged product produces a loss of -4.81 percent.

MFS BTC1 V173-Mini Future on the other hand, offers a leveraged product for profit seeking in the falling price of Bitcoin futures. At the time of writing, it offers 2.06x leverage on the underlying Bitcoin futures. When the price of the target benefit decreases by one percent, the value of Mini increases by 2.06 percent. If, contrary to expectations, the Bitcoin future rises by one percent, the loss of the leveraged product will be -2.06 percent.

Vontobel's investment products can be traded during the opening hours of the Helsinki Stock Exchange. When trading leveraged products, the risk of loss increases. Losing the entire invested capital is possible. The underlying Bitcoin future is quoted in US dollars, so the yield of the leveraged product also depends on the price changes of the EUR/USD currency pair. Investors bear the credit risk of the issuer of the product (Vontobel).


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