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Bitcoin ETF Hopes Accelerate

GB Market Commentary 04/10/2021

by Marcus Sotiriou

Bitcoin finished last week strong after bouncing off the 21 weekly exponential moving average (considered by many to be the bull market support band). Even during fears surrounding the global markets, with the S&P 500 showing weakness, Bitcoin bounced 20% from last week’s low to a high of $49,250. Bitcoin is currently hovering around the $48,000 resistance with a hidden bearish divergence on the daily time frame (shown below). There is now a key down trending resistance for Bitcoin to overcome, dating back to the April ATH, before it can continue its path to price discovery.

Bitcoin / U.S. Dollar

On Wednesday, the SEC announced that they have delayed its decision on four Bitcoin ETF proposals. The applications are those of Global X, WisdomTree, Kryptoin and Valkyrie. The new deadline dates for the SEC to make its decisions are Nov. 21 (Global X), Dec. 8 (Valkyrie), Dec. 11 (WisdomTree) and Dec. 24 (Kryptoin). Out of the four mentioned, Valkyrie is the only that is an ETF linked to the bitcoin futures market, as opposed to the performance of bitcoin itself. A Bloomberg analyst, named Eric Balhunas, claimed:

“The futures ETFs filed under the '40 Act (which Genz loves) are very much alive and likely on schedule (we think 75% chance approved in Oct).” A futures backed ETF is not backed by physical Bitcoin. However, it would still open the floodgates for institutional adoption, and hopefully result in a spot backed ETF being approved in the not-so-distant future, which would allow ordinary people to include the asset easily in their brokerage account.

An ETF approval could be the catalyst for a crypto market rally in Q4 which many analysts are predicting and aligns with what has happened in previous years.

Bitcoin Monthly Returns (%)

Active Polygon PoS Chain Addresses graph

Adoption from nation states continues to rise as Texas attempts to become the world leader for Bitcoin and blockchain. The Texas Blockchain Council has grown to 70 members and will be hosting the Texas Blockchain Summit next Friday. This event could prove to be the largest state-level blockchain one-day summit ever. Since China’s ban on Bitcoin mining Texas has benefited significantly, and now has half a dozen Bitcoin mega mining farms. Also, El Salvador have reportedly mined $300 of Bitcoin using the heat from a volcano.

Adoption rates for Ethereum Layer 2 solutions continue to rise, as the number of Polygon’s active daily addresses flipped Ethereum’s for the first-time last week. Data form Etherscan shows that the number of active addresses on Polygon has grown by 168% in the past 30 days, while Ethereum’s count has gone up by a measly 0.6%. This surge in adoption is mainly down to NFTs and gaming, and may result in an increase in price for the native token, MATIC, in the short term.

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