It is normal for Bitcoin (BTC), price to cool down after reaching new all-time highs. This can be in the form profit taking, consolidation, uncertainty and traders being cautious about opening new positions at record levels. As Bitcoin prices struggle to hold the $60,000 support level, this appears to be what is happening.
Chart for BTC/USDT 4 hours TradingView
Most analysts maintain a bullish macro view on Bitcoin’s price trajectory. This is even though Willy Woo, PlanB and others claim that the price of Bitcoin hit $67,000 last week, which indicates that the second-half was officially certified.
Here are some thoughts from analysts about the future price of Bitcoin and the market dynamics.
Bitcoin ETFs “completely altered the structure of market”
The launch of a BTC ETF has been the focus of much of the excitement surrounding Bitcoin’s price in the last few weeks. Analysts have been predicting that approval of the instrument would open up new levels of access to institutional investors and cement Bitcoin’s “mainstream status” for years.
Two futures-based BTC ETFs are now in operation. Many firms have rushed to create new ETFs. These include a Valkyrie leveraged ETF filing and an inverse Bitcoin ETF (Direxion) that would allow speculators short the price.
According to Ben Lilly (market analyst and cofounder of Jarvis Labs), the arrival of these ETF options “completely changed market structure,” as there are now tertiary derivatives of crypto via spot access and CME futures. There are also futures-based ETFs. And options on ProShares Bitcoin Strategy eTF (BITO).
This will allow arbitrage opportunities to be created in the market, similar to the CME spread. As more Bitcoin strategies are funded by more desks, this spread will shrink. In effect, volatility will decrease as more strategies execute capital to offset swings.
Lilly stated that the main takeaway of the launch of BTC-ETFs is that more capital will flow into different forms of Bitcoin exposure. He also said that spreads could continue until a new equilibrium is achieved.
Nalysts anticipate a fierce fight between bears and bulls.
The issue of how these products determine the price for Bitcoin has been overlooked in the rush to roll out Bitcoin ETFs. This will impact the spot price and spread.
David Lifchitz is the managing partner at ExoAlpha and chief investment officer. He stated that the spread between the Bitcoin ETF and the spot price will be greater because these other contracts have a premium/discount, which tends to increase the further the contract expiration.
“Add to this the cost of continually rolling out futures from month to month, which will also impact the value of ETF vs spot over time, you get a complete crapshoot that won’t track closely the BTC spot market price, but only correlates with it!”
Lifchitz referred to the strong rejection of the $63,000 resistance level for BTC and said that there is a fierce battle between Bulls and Bears.
“However, previous attempts by the bears to down BTC were mild and took it down to $58,000 before the bulls again charged… so our downside targets are around $58,000 and $53,000 in short term and we look for $63,000 resistance as support for the next leg.
Related: Bitcoin price dip corresponds to October 2017, with Bitcoin ‘explosion’ still forecasted before 2022
Some people expect a pullback to low $50,000.
Ryan Cantering Clark (an independent market analyst) also expressed similar sentiments. He posted the following tweet stating why he was “out of BTC completely”
TBF. This market feels heavy. The market feels heavy because of all the activity in smaller projects and the failures by BTC at ATH. This market is momo driven, and tends to fall under its own weight instead of range higher. BTC is out of reach for now.
— Ryan Cantering Clark (@CanteringClark) October 27, 2021
Clark followed-up with a tweet highlighting lower level support zones Clark should be aware of and where an entry point might exist.
“If $58,000 doesn’t hold, we will likely revisit the low $50,000s. I will therefore either join the lower $50,000s or go higher. It would be great if leverage could be removed from the system without these conditions. That is my primary concern right now.”
The total cryptocurrency market is now worth $2.452 trillion, and Bitcoin’s dominance rate at 44.9%.
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