Bitcoin (BTC) crossed the $60,000 mark on October 15 after steadily rising towards the coveted mark all October. In April, Bitcoin reached an all-time high of $65,000 to plummet back to $30,000 levels by mid-July. Riding high on the much-anticipated debut of the first-ever Bitcoin ETF at the New York Stock Exchange, the asset broke the previous record to reach another all-time high close to $67,000 on October 20. It would be interesting to note that just a year ago, BTC was priced at $11,500.
Bitcoin has been rising the cryptocurrency charts and gaining traction in investor and institutional circles despite its known volatility, in addition to beginner interest, of course. El Salvador has already adopted it as its legal currency alongside the Dollar. Several other countries are charting roadmaps and frameworks leading to a holistic adoption of the cryptocurrency behemoth into the traditional monetary system.
As the number one cryptocurrency becomes bigger by the day, where does its future lie? What can we expect from Bitcoin after it has crossed the $60,000 mark?
The Events Leading to $60K
The SEC (Securities and Exchange Commission) had thwarted all the earlier attempts by ETF issuers to introduce an exchange-traded fund based on cryptocurrencies, citing investor safety concerns. A CNBC spokesperson further averred that the BTC Futures had no formal approval from the SEC. However, after the announcement from Proshares, it is unlikely that the SEC will block the listing.
On October 19, ProShares Bitcoin Strategy charted a history as it became the first Bitcoin Futures ETF to be traded on New York Stock Exchange. The fund will track the movements of Bitcoin Futures on the Chicago Mercantile Exchange(CME), meaning that investors will be bidding on the future price performance of Bitcoin instead of in actual cryptocurrency themselves. The fund will trade under the ticker ‘BITO’. The likelihood of the ETF launch had made BTC prices soar by over 40% in October alone. The global crypto market led by the flamboyant Bitcoin soared towards $2.7 trillion market capitalization- another feat achieved after months of tiptoeing around $2 trillion.
Besides the ETF craze, the rise past $60,000 was obvious after weeks of positive net inflows from institutional investors into the Bitcoin market and the steady rise in investors going long-term while investing in Bitcoin.
Will More crypto-based ETFs Follow Suit?
The ProShares ETF grew by 3%, collecting around $570 million in assets and saw around $1 billion in trading volume on the first day of trading itself. The majority of the interest came from retail investors that were reluctant to cross the crypto bridge by themselves earlier. ETFs can be the new indirect route for those conscious investors that want leveraged returns from cryptocurrencies.
SEC has indicated its preference for tracking ETFs formed under the 1940 Investment Act that assures considerable investor protection. Invesco (It later retracted its application) and Valkyrie have applied for similar ETFs that could be the next in the ETF race after ProShares. Earlier, Bitcoin derivatives were available only via GBTC (Grayscale Bitcoin Trust). This was available over-the-counter to selected few wealthy investors. One could assume more such Bitcoin ETFs traded on regulated exchanges very soon.
Greater Capital Inflows and Retail Investment
Via ETFs, Bitcoin can reach into the hands of small and institutional investors, and the capital inflows can add to the growing acceptability of the cryptocurrency in the mainstream financial and monetary systems across the globe. Already, investors have been putting huge sums into crypto funds in anticipation of the WTF launch. The total assets under management currently stand at $72.3 billion – the highest so far. This democratization and mass adoption level could even lend Bitcoin the status of currency in the coming years.
Dollar Inflation vs Bitcoin
Touted as the ‘digital gold,’ Bitcoin is seen as the new hedge against Dollar inflation by retail and institutional investors. Post-pandemic, the Biden government in the US has been injudiciously deficit financing the budgetary expenses to provide for the special allowance declared by the government. The Dollar has been facing inflation above the permissible rate of 2%. Experts predict that the incessant use of deficit financing measures could trigger the inflation rates to rise uncontrollably, which might even cause the entire monetary system in the US to crumble.
Similar phenomena are being witnessed in other countries as well. In such a scenario, informed investors and institutions will look for Dollar alternatives, and Bitcoin could prove to be the panacea for curbing inflation and currency debasement very soon.
Will Bitcoin hit $150k?
The current graph of growth for Bitcoin posits bright possibilities in the near future. One might witness many ETFs being traded on regulated mercantile exchanges such as the CME. At the same time, the global crypto market cap might soon touch the $3 trillion mark. Looking at Bitcoin’s past growth trajectory, experts project Bitcoin hitting the $150k as a strong possibility in the long term.
“This is the big big #Bitcoin picture. *If* This repeating pattern continues, the top end for $BTC this cycle is – $150,000, and return to the bottom line would be ~$20,000.”~Glen Goodman, Crypto Author
Bitcoin volatility would persist, but analysts are predicting a ‘ludicrously strong’ bull run for Bitcoin in the fourth quarter of the year. However, the chances of overbought conditions in the market would continue to persist, which might cause BTC prices to drop. Investors should remain stoic to short-term Bitcoin fluctuations to reap profits from Bitcoin movements in the long term.
PS: Whenever you start investing in a fund having Bitcoin Futures contracts, first weigh the potential risks and benefits of the investment, then invest.Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.