Positivity through bitcoin spot ETFs?!

Thought of the week

The “news” and perceived positivity around the Bitcoin Spot ETF issue in the U.S. seems to be more important to the markets and development than the potential negative impact from the warlike conflict in the Middle East. This illustrates that the markets “local” trouble spots are not affecting the global financial markets in the long run.

Digital Asset News

The U.S. Securities and Exchange Commission does not plan to appeal the recent court ruling in favor of Grayscale Investments, according to media reports. The ruling requires the SEC to consider the company’s application for a “direct” Bitcoin index fund (ETF). Bloomberg analysts also assume that the SEC will not appeal to the Supreme Court, but stress that this does not necessarily mean that Grayscale’s application will be approved.

If the reports are true, the SEC will have to follow the court’s August order and consider Grayscale’s request to convert the Grayscale Bitcoin Trust (GBTC) into a bitcoin spot ETF.

According to Reuters, the relevant appeals court is expected to issue a mandate to that effect, which will still specify exactly how the ruling will be “implemented” by the SEC.

In a separate previous X post on Oct. 13, Seyffart reiterated his view that there is a 90 percent chance that a spot bitcoin ETF will be approved in January 2024, with Cathie Woods ARK Invest’s application in particular having a good chance of doing so. Thus, there is currently a positive mood around this topic of regulation / approval of these investment products in the US, which has been bubbling for years.

First and foremost, the hype around a possible Bitcoin ETF and the upcoming halving provide relative strength for BTC against its “little brother” Ethereum. The Ethereum price is at a 15-month low in the currency pair with Bitcoin, which is also the lowest level since the Ethereum blockchain moved to the Proof-of-Stake (PoS) consensus process.

Ethereum’s continued weakness against Bitcoin is also reflected in institutional demand.

Bitcoin mutual funds, for example, have raised a whopping $246 million year-to-date through Oct. 6, CoinShares data show. Comparable Ethereum mutual funds, on the other hand, have seen a net outflow of $104 million over the same period. This glaring difference is most likely due to the fact that hopes are currently high for the approval of a first “direct” Bitcoin index fund (ETF) in the US.

Some experts even estimate that such a Bitcoin ETF could flush as much as $600 billion into the market. Furthermore, the upcoming halving of the market-leading cryptocurrency in April 2024 also provides additional impetus against the altcoins.

Largely due to increased demand from customers and dealers, Italian luxury carmaker Ferrari is now introducing crypto payments. Ferrari will accept crypto payments for its luxury sports cars in the US due to corresponding customer demand. In related news, the automaker also plans to offer crypto payments in Europe soon.

According to an Oct. 14 Reuters report, Ferrari’s chief marketing and commercial officer, Enrico Galliera, confirmed the luxury car brand’s intentions to that effect. Ferrari’s decision to introduce payments in crypto was largely driven by demand from customers and retailers, as many customers, including young investors in particular, have already invested in digital currencies.

Although Galliera did not name the number of cars Ferrari plans to sell via crypto payments, according to the report, he stressed that the automaker’s strong order portfolio is already booked through 2025. Ferrari wants to test this expansion market to connect with potential buyers beyond its usual clientele. The luxury carmaker plans to introduce crypto payments in Europe by the first quarter of 2024 and then expand to other crypto-friendly regions.

Digital Asset Market

Chart-wise, Bitcoin is now once again at the upper edge of the trend channel at ~$28,000 after sell-offs initially provided support in recent days. Last week highlighted that without a catalyst, the markets may see mild profit taking and selling, but based on the negativity of the global conflicts, the market showed relative strength. Based on the current situation in the digital asset market, further bounces could follow that could take Bitcoin above the psychological ~$30,000 mark. The focus this week should be mainly on the Bitcoin Spot ETF developments in the US and also continue to closely analyze the developments in the Middle East as further escalations would affect the global markets.

The next price targets in case of positive developments: ~$28,500, ~$29,200, ~30,250.
The next price targets in case of negative development: ~$27,250, ~$26,700, ~$26,200

Currently Bitcoin, does not offer any risk-optimized entries due to the strong upswing on Monday morning. With continued positivity, further upswings, with slightly increased risk appetite through long positions could be adequately traded. At the same time, due to past sell-offs after upswings, there should always be the possibility of a quick profit taking or a short as a hedge to minimize the risk.

Weekly overview

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