BTC price hits $56K as bulls return and talk focuses on Bitcoin ETF approval

Bitcoin (BTC), which rose $2,000 in just two hours, beat its four-month peak on Oct. 8.

BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView

BTC price beats Wednesday high

Cointelegraph Markets Pro and TradingView data showed that BTC/USD hit just above $56,150 on Bitstamp, in a new show of bullish momentum.

The dramatic increase in Wednesday’s trading had reached $55,800. This level was still the benchmark. The pair spent Thursday consolidating.

We have another $BTC pump in the works. It’s a brutal one, I have to say.
— Galaxy (@galaxyBTC), October 7, 2021

In anticipation of traders’ new upside, the conversation shifted to price action and continued to discuss the possibility of an American regulator approval for exchange-traded funds (ETFs).

Cointelegraph reported that there is high confidence that a futures-backed Bitcoin ETF, even if it is not a traditional spot-based product, will be approved this month.

As was the case in the long-running battle to obtain such approval, critics still believe that an ETF could cause more harm to Bitcoin than good. This week, particular futures were under scrutiny.

Alex Krueger, macro analyst, explained that few people understand the bitcoin ETF and that it would have futures if approved.

“Futures are often in strong contango (i.e. Futures > spot), so the ETF would “sell low to purchase high” and suffer Contango Bleed at rollover. Assets with strong contango tend to trend lower.

Krueger stated that a spot-based ETF is the best option for institutional clients with large volumes, since the futures-based alternative has excessive risk.

There are mixed views about ETF benefits

Analyst Willy Woo also highlighted the pros and cons of each type of ETF.

Related: Price spike: Are whales leading the approval of a Bitcoin futures exchange traded fund (ETF)?

Apart from their initial reach, I believe the best thing about ETFs is their ability to stem BTC’s unit bias problem. The long-term negatives: Spot ETFs can lead to increased selling pressure due to fees. Futures ETFs: Potential for price suppression and increased volatility due to futures dominance.
October 8, 2021 — Willy Woo (@woonomic).

Grayscale Bitcoin Trust’s fortunes, which commentators believe are already being affected by ETF approval, saw a negative share price relative spot, this passing of -17% Thursday.

Michael Sonnenshein (CEO) of the firm has reaffirmed his plans to convert any fund into an ETF in the future.