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Bitcoin on the rise fueled by ETF news

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Sijoitustieto
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

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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).

Risks

This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the trading products (securities) mentioned herein, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. The base prospectus and final terms constitute the solely binding sales documents for the securities and are available under the product links. It is recommended that potential investors read these documents before making any investment decision. The documents and the key information document are published on the website of the issuer, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany, on prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information includes or relates to figures of past performance. Past performance is not a reliable indicator of future performance.


This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capital protected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.


Investors in the products are exposed to the risk that the Issuer or the Guarantor may not be able to meet its obligations under the products. A total loss of the invested capital is possible. The products are not subject to any deposit protection.


The value of the products can fall significantly below the purchase price due to changes in market factors, especially if the value of the underlying asset falls. The products are not capital-protected


Due to the leverage effect, there is an increased risk of loss (risk of total loss) with leverage products, e.g. Bull & Bear Certificates, Warrants and Mini Futures.


If the product currency differs from the currency of the underlying asset, the value of a product will also depend on the exchange rate between the respective currencies. As a result, the value of a product can fluctuate significantly.


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Please read this information before continuing, as products and services contained on this website are not accessible to certain persons. Of importance are the respective prospectuses which are attainable from the issuer: Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, DE-60323 Frankfurt am Main, Germany, as well as from this website.