Wall Street opened for the first Bitcoin (BTC) exchange-traded fund (ETF) on October 19, with the listing of ProShares Bitcoin Strategy (BITO) on the New York Stock Exchange. The fund attracted over $ 1 billion in trading volume on day one, while the price of BTC hit a new high of $ 67,000.
But the spot gains didn’t stay too long, with BTC cutting some gains ahead of the weekend.
Bitcoin’s price corrected nearly 11% from its all-time high to reach levels below $ 60,000 on Saturday, raising fears of massive sales that typically occur after the launch of major crypto derivatives on Wall. Street.
Analysts call for broader BTC correction
Nunya Bizniz, Independent Market Analyst on Twitter, recalled two such major events: the listing of the first Bitcoin futures on the Chicago Mercantile Exchange (CME) and the start of the Coinbase stock crypto-exchange service (COIN) on the Nasdaq exchange.
Notably, CME launched its Bitcoin Futures product on December 18, 2017, when Bitcoin hit its all-time high of around $ 20,000. But the launch also marked the start of one of Bitcoin’s longest bearish cycles, which hit a low of around $ 3,200 twelve months later.
Likewise, COIN’s highly celebrated debut on Wall Street on April 4, 2021 coincided with Bitcoin’s rally to a new all-time high of around $ 65,000 ten days later. Nonetheless, the bullish movement encountered a wave of massive selling, which caused BTC to correct up to $ 28,800.
Nooo, my God. No God, please no! No! No! Noooooon! pic.twitter.com/ITKFBJqK6h
– Nunya Bizniz (@Pladizow) 22 October 2021
As a result, the recent ProShares Bitcoin ETF has left Bizniz and many other analysts worried about the so-called “buy the rumor, sell the news” correction. For example, analyst Lark Davis noted that he “wouldn’t be surprised” if the price of Bitcoin collapsed after the launch of the ProShares ETF, as he did after the launch of CME Bitcoin Futures.
#bitcoin CME Futures
– Announced October 31, 2017.
– BTC rallies 224%
– Launch on December 18, the day BTC peaked in 2017
I wouldn’t be shocked to see the ETF launch go exactly like this.
Epic buys rumor, sells news event pic.twitter.com/sKrmhdLxQv
– Alouette Davis (@TheCryptoLark) October 8, 2021
Additionally, Dan Morehead, CEO and Co-Chief Investment Officer at Pantera Capital, wrote in a newsletter earlier this month that “he might want to take some tokens off the table” ahead of the launch of the Bitcoin ETF.
Impressive beginnings for Bitcoin ETF
Despite the historic drop associated with the high-profile crypto quotes on Wall Street, some analysts believe the impressive debut of the Bitcoin ETF would result in limited downward movements in the BTC spot market.
Todd Rosenbluth, head of ETF and mutual fund research at CFRA, told the Financial Times that ProShare’s $ 1 billion debut is “a sign of pent-up demand” among traditional financial firms seeking to mark a slice of the growing crypto industry.
JPMorgan Chase added that retail traders only accounted for 12-15% of net entries into BITO in the first two days of trading.
Related: Bitcoin Decides Fate of $ 60,000 As Weekly Close Keeps BTC Traders on their toes
This has highlighted significant interest in Bitcoin ETFs among institutions, with open interest in Bitcoin Futures with cash margin increasing to 79% since the start of the month and a CME base rising from negative in July to over 16% earlier this week.
Noelle Acheson, head of market analysis at crypto trading firm Genesis, noted that the perpetual turnover base of Bitcoin futures contracts, a metric by which to gauge the demand for leverage, has increased but has not was still only 13.08% compared to 34.6% in mid-April.
High leverage remains a common factor in recent corrections in the BTC spot market. In other words, neutral funding rates at the moment suggest that the likelihood of a significant pullback is relatively low.
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