After reaching new all-time highs, it is common for Bitcoin to (BTC) price to see some cooling in the form of profit taking, consolidation and uncertainty on the part of traders who are wary of opening new positions at all-time highs. This appears to be exactly what is happening this week as the Bitcoin price struggles to hold the $ 60,000 level as support.
Overall, most analysts still retain a macro bullish view of Bitcoin's price trajectory, to the extent that PlanB, Willy Woo, and others claim that the second half of the bull market was certified by the price that hit $. 67,000 last week.
Here's what analysts have to say about what may happen after the price of Bitcoin, along with some thoughts on the greater market dynamics currently in play.
Bitcoin ETFs have 'completely changed the structure of the market'
Much of the hype surrounding Bitcoin (BTC) The price for the past two weeks has revolved around the launch of a BTC exchange-traded fund (ETF). For years, analysts have said that the approval of the instrument would allow a new level of access for institutional investors and would officially consolidate the "mainstream" status of Bitcoin.
Now that two futures-based BTC ETFs have been launched, many companies have been quick to propose new ETFs, including a Valkyrie leveraged ETF presentation and a Direxion Reverse Bitcoin ETF that would allow speculators to shorten the price of BTC.
The advent of these ETF options has "completely changed the structure of the market," according to Ben Lilly, market analyst and co-founder of Jarvis Labs, "as tertiary derivatives now exist in crypto through access to spot, CME futures, Futures- ETFs and Options Based on ProShares Bitcoin Strategy ETF (BITO) ".
Lilly said,
“This will create many arbitrage opportunities in the market, as already exists with the CME spread. This spread will compress over time as more desktops allocate capital to Bitcoin strategies. And indeed, volatility is sure to compress in the future, as any change will cause more capital to be executed as part of various strategies. "
According to Lilly, the main takeaway from the launch of BTC ETFs is that "more capital will flow into various forms of exposure to Bitcoin." He also noted that "this process takes time" and that "spreads can persist until this new equilibrium is found."
Analysts Expect Intense Fight Between Bulls and Bears
One topic that hasn't received much attention amid the launch of Bitcoin ETFs is the method by which these products determine how the price of BTC will affect the actual spot price of BTC, as well as the spread.
According to David Lifchitz, Managing Partner and Chief Investment Officer at ExoAlpha, the "premiums and discounts over fair value" that apply to these products will likely lead to higher spreads between the specific Bitcoin ETF and the underlying spot price, "as these other contracts also have a premium / discount, which tends to be wider the longer the contract expires. "
Lifchitz said:
Add to that the cost of continually rolling out futures from month to month, which will also affect the value of the ETF versus spot over time, and you end up with a full crapshoot that won't closely track BTC spot price. , but it correlates with him. "
In regards to BTC price action, Lifchitz noted the firm rejection at the $ 63,000 resistance level, noting that "the fighting here is intense between bulls and bears."
Lifchitz said:
“However, previous attempts by bears to take down BTC have been mild, reducing it to just $ 58,000 before the bulls charged again ... so we keep our possible downside targets around $ 58,000 and $ 53,000 at the short term, and looking for resistance at $ 63,000 to become support for the next stage. "
Related: Bitcoin price drop coincides with October 2017 with BTC 'explosion' still forecast before 2022
Some expect a pullback to the low range of $ 50,000
Independent market analyst Ryan Cantering Clark expressed similar sentiments, who posted the following tweet outlining why he is "completely out of BTC for now."
TBF.
This market feels a bit heavy. All the activity in the smaller projects and the failure of BTC and ETH in ATH feels like the canary in the coal mine.
This market tends to be driven by momo and fall under its own weight rather than a higher range.
Out of BTC completely for now.
- Ryan Cantering Clark (@CanteringClark) October 27, 2021
In a follow-up tweet, Clark highlighted lower-level support zones to watch out for and where a good entry could come.
Clark said,
“If $ 58,000 does not hold, we are likely to revisit the low $ 50,000. So I will get involved there or get involved higher. If you can remove leverage from the system without the above conditions, great. Right now that's my main concern. "
The overall cryptocurrency market capitalization is now $ 2.452 trillion and Bitcoin's dominance rate is 44.9%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade move involves risk, you should do your own research when making a decision.
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