BTC price hits $56K as bulls return and talk focuses on Bitcoin ETF approval
A day of consolidation ends in fresh bullishness for Bitcoin price action, which continues to close in on final resistance below all-time highs.
Bitcoin (BTC) returned to beat the week’s four-month highs on Oct. 8, climbing $2,000 in two hours.
BTC’s price beats Wednesday’s high
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting just over $56,150 on Bitstamp in a fresh show of bullish momentum.
Wednesday’s dramatic uptick had topped out at $55,800, this remaining the level to beat as the pair then spent Thursday consolidating.
I think we have another $BTC pump coming right away.
A brutal one, if I must say.
— Galaxy (@galaxyBTC) October 7, 2021
Amid anticipation of fresh upside from traders, talk beyond price action continued to focus on the likelihood of an exchange-traded fund (ETF) approval from United States regulator — and its implications.
As Cointelegraph reported, confidence is high that a futures-backed Bitcoin ETF will get the go-ahead this month, if not a traditional spot-based product.
As has been the case throughout the years-long battle to get such an approval, however, critics continue to argue that an ETF could ultimately cause more harm than good to Bitcoin. In particular, futures came in for scrutiny this week.
“Few understand this bitcoin ETF if approved would have futures as underlying,” macro analyst Alex Krüger explained in a Twitter thread.
“Futures are usually in strong contango (i.e. futures > spot), so at rollover the ETF would *sell low to buy high*, and suffer Contango Bleed. Assets with strong contango bleed trend lower.”
Krüger added that a spot-based ETF would be the only option attractive to large-volume institutional clients, as the futures-based alternative carries excessive risk.
Mixed views on ETF benefits
Analyst Willy Woo, meanwhile, underlined the overall pros and cons of both kinds of ETF.
Related: Price spike: Are whales front-running the approval of a Bitcoin futures ETF?
I think the best thing about ETFs apart from their initial reach is the potential to stem BTC’s unit bias problem.
The long term negatives:
Spot ETFs – increased sell pressure from fees.
Futures ETFs – potential for price suppression and more volatility due to futures dominance.— Willy Woo (@woonomic) October 8, 2021
The Grayscale Bitcoin Trust, the fortunes of which commentators argue are already being impacted by the prospective ETF approval, continued to see negative share price relative to spot, this passing -17% Thursday.
The firm’s CEO, Michael Sonnenshein, has reiterated plans to convert potentially every fund to an ETF in the future.
