Following the signaled approval of a futures ETF from ProShares, Bitcoin (BTC) entered this week above $60,000. And whether it will touch the fabled $100,000 this year will depend on the next few days, analysts say.
Futures ETF launch
While ProShares is expected to open the flood gates to a list of fund managers pursuing US-listed ETF products, Raoul Pal, a legendary hedge fund manager, pointed out on Twitter why all ETFs are not created equal.
— Real Vision (@RealVision) October 15, 2021
“If the SEC really cared about looking after investors, they wouldn’t allow these futures contract versions,” said Pal.
“Issuing the BTC futures ETF is a good step but it’s basically handing hedge funds a massive arbitrage opportunity as the futures will trade at a large premium in bull phases and they get to capture those returns,” he added, while shortly noting that ProShares futures ETF marks an achievement in acknowledging the legitimacy of the crypto.
In the case of a futures contract ETF, an actual Bitcoin is neither bought nor sold during the execution of the trade, which then consequently can’t have a direct impact on the supply shock mechanics that Bitcoin is designed to achieve through its scarcity model.
“This is the old financial market trick – you now have to add multiple new intermediaries who all make profits – the ETF provider, clearinghouse, futures broker, administrator, auditor, law firm, CME, and hedge fund arbs. Wall Street gets richer. Retail investors lose. Again,” Pal concluded.
BTC price speculation
Meanwhile, the price speculation amongst crypto enthusiasts does not fall short of astronomical targets.
As pointed out by Frost, back in 2004, the approval of the first Gold-based ETF preceded an unprecedented rally in the underlying commodity, topping out at a 5x increase in price.
“This SEC approval could also create a local top in prices much like the Coinbase IPO and when BTC Futures debuted on the CME, as people had generally bought into the news ahead of the decision and look to take profits off the table once announced,” added Lucas Kiely, Chief Investment Officer of YIELD App, pointing out how this week’s price action could set the stage for the rest of the quarter.
As the anticipation continues to grow, Kiely reminded that Bitcoin “whales are in the driving seat to an almost unprecedented degree, with the mean to median transaction size ratio at its highest level since 2013.”
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