The Bitcoin price is holding steady close to its all-time high as investors cheer the inflows into the newly launched ProShares Bitcoin Strategy ETF. The ETF, whose ticker name is BITO started trading on Tuesday. So, what is the forecast of the BTC price as the Bitcoin fear and greed index points to extreme greed?
ProShares, a company that provides hundreds of ETFs, launched their Bitcoin futures ETF on Tuesday. The fund was welcomed well by investors as its price jumped from $40 to more than $42.
So, which is a better option for you to buy when you want exposure to Bitcoin? Let us look at the cost of buying the two. For one, buying Bitcoin in most exchanges is about 0.50%.
Since BITO is traded like a stock, there are no costs of buying it in most brokers like Robinhood. However, you will need to pay an expense ratio of 0.95%. While this ratio may seem low, it is highly expensive considering that most ETFs have an expense ratio of less than 0.40%.
Another thing worth noting is that the BITO fund does not invest directly in Bitcoin. Since it is based on futures contracts, it tracks the CME Futures contracts.
Meanwhile, the futures ETF could see more money flow out of Bitcoin. This is because the ETF is seen as a relatively safe option for investing in the market. Unlike real Bitcoin, the futures contracts can’t be stolen and there is no need for having the wallets.
While the overall view of Bitcoin is bullish, we can’t rule out a situation where the price retreats in the near term. This could happen because of what is known as buying the rumour and selling the news. In this case, the rumour was that we could have a futures ETF.
The news was that the futures ETF was already launched. Now, with the Bitcoin fear and greed index being at 82, there is extreme greed. Therefore, there is a likelihood that the price will see a pullback in the near term.
The daily chart shows that the BTC price has made an impeccable recovery in the past few weeks. The price has moved from less than $30,000 to the current level of more than $63,000. This means that it has more than doubled. The price is now attempting to move above the all-time high. It is also being supported by the 25-day and 50-day moving averages.
Therefore, since this pattern resembles a cup and handle pattern, there is a likelihood that a short-term healthy pullback will happen.
This post was last modified on Oct 20, 2021, 07:34 BST 07:34