Dear Friends,
In the midst of global chaos and whispers of a possible spot ETF on the horizon, Bitcoin has been making waves. And let me tell you, it's been a good month for our beloved digital gold. Coincidentally October has always been a good month for crypto, to the point that has been nicknamed “Uptober”. Over the past month, Bitcoin's price has surged by a whopping +31%. Impressive, right?
The Big Jump. Bitcoin's price trajectory has been on the upswing. The momentum really picked up steam when it smashed through the $30,000 barrier. Remember that figure? It's the same price point that saw giants like Three Arrows Capital and Luna crumble, dragging Bitcoin into the bearish abyss of 2022. But now? It's a distant memory, a psychological barrier we've left behind.
Blackrock's Bold Bitcoin Move. Two months ago a US judge said it was “arbitrary and capricious” that the SEC allows bitcoin futures ETFs while blocking ETFs that hold bitcoin. The ruling will probably force the SEC to approve spot bitcoin ETFs because its only other option, withdrawing previous approvals of futures ETFs, would be even more embarrassing. The SEC’s defeat has been a huge deal for bitcoin. Amidst this bullish backdrop, Blackrock, the world's leading asset manager, is making significant strides with its spot Bitcoin ETF. They've secured both a ticker symbol, IBTC, and a CUSIP number, 46438F101, for their upcoming iShares Bitcoin Trust. It's now listed on the DTCC, the powerhouse behind clearing Nasdaq trades. This move by Blackrock has added fuel to the bullish sentiment, further propelling Bitcoin's price. Approximately 10 other spot ETFs are also seeking approval from the SEC. A spot ETF is a big deal for the bitcoin market.
A spot Bitcoin ETF is based on the actual Bitcoin price right now (or "on the spot"). It allows people to invest in Bitcoin's current value without buying the digital currency directly. When someone invests in a spot Bitcoin ETF, the institution behind the ETF typically buys actual Bitcoin to back that investment. This means that if more people buy the ETF, the institution needs to purchase more Bitcoin, driving up its demand and potentially its price.
On the other hand, futures ETFs are based on predictions. They allow people to invest in what they think Bitcoin's price will be in the future, not its current value. When someone invests in a futures-based Bitcoin ETF, the institution doesn't buy actual Bitcoin. Instead, they deal with Bitcoin futures contracts, which are agreements to buy or sell Bitcoin at a specific price on a future date. Because of this difference in operation, futures ETFs might not have the same direct impact on Bitcoin's immediate price since they're about future predictions and not the current value. Futures markets have been typically used for manipulating prices and suppressing markets. That’s why the hostile SEC was very eager to approve them a long time ago. It backfired.
In simple terms: A spot Bitcoin ETF can make Bitcoin's price go up because it increases demand for Bitcoin right now, as the institution has to buy actual Bitcoin. In contrast, futures ETFs are more about betting on what the price will be later on, without the need for the institution to purchase the actual digital currency.
Beyond the Accumulation Phase. As we ride this new bullish wave, Bitcoin's price is soaring past crucial accumulation zones. For much of 2022 and 2023, the price lingered below the 2-year moving average. But history tells us that buying Bitcoin below this level has been a goldmine for investors. We have now exited the fire sales zone. The upper boundary of the strand lines currently sits around 150k. If history rhymes this is expected to be visited during 2025.
Upcoming Resistance? While Bitcoin's rally is commendable, it's currently brushing up against a resistance level from early 2022, pegged at $34,200. But with potential ETF news or other positive tidbits, we might just see Bitcoin leapfrog past this into the early bull phase.
The Global Perspective. With the world in turmoil, Bitcoin is shining brighter as a beacon of stability. Concerns over the Federal Reserve's actions and the ballooning Federal debt have traditional markets on edge. As these markets wobble, Bitcoin, with its fixed supply, is emerging as a solid alternative.
Unfortunately, this market can also fall victim to anything that is considered extremely violent to other markets. So any major geopolitical events that may crush the global economy, can crush Bitcoin too.
The Grand Finale. Factors like ETF rumors are propelling Bitcoin's price. But for it to truly skyrocket and set new records, we need a surge in Global Liquidity. More money in the system means more funds to invest in assets like Bitcoin. And with Bitcoin's decentralized nature and fixed supply, any spike in Global Liquidity only underscores the pitfalls of traditional banking systems.
There is a chance that traditional markets will flee to bitcoin without a global liquidity increase but I am not sure what kind of Geopolitical developments will lead to that and I am not sure I am looking forward to it.
Keep an eye on the Global M2 vs BTC chart in the coming months. It might just hint at when Bitcoin is gearing up for its grand ascent towards the coveted $100,000 mark.
Until next time, stay crypto-curious and keep an eye on the exciting developments in the crypto world!
Warm regards,
The Futurist Hodler