Bitcoin Analysis: BTC/USD Bursts Higher on ETF Expectations

Bitcoin Key Points

A “physical” Bitcoin ETF in the US appears to be more of a question of when than if now.
Unlike futures-based products, physical ETFs fundamentally alter the supply/demand balance in a bullish way.
Technically speaking, BTC/USD will have a bullish bias as long as it holds above $32K, with room toward $36K next.

Bitcoin Fundamental Analysis

After a long summer lull, optimism and volatility have returned to the crypto markets.

The proximate catalyst for the latest leg higher in Bitcoin has been speculation of the approval of a “physical” Bitcoin ETF in the US. After a series of embarrassing legal losses, the SEC is seen as likely to approve a(t least one) Bitcoin ETF, with Cathie Wood’s ARK Invest application at the front of the line. Meanwhile, news that industry bellwether Blackrock had listed its IBTC ticker on the Depository Trust and Clearing Corporation website, an essentially precursor to listing a new ETF, bolstered the case that an approval may come sooner rather than later.

Unlike previous high-profile “mainstream” crypto launches such as futures contracts at the CME and a futures-based ETF that marked near-term highs in the crypto market, a “physical” ETF would have to buy and hold Bitcoin equal to its assets under management, altering the fundamental supply and demand balance in the market. Of course, markets are already frontrunning this possibility, so there is still potential for a “buy the rumor, sell the news” reaction whenever an ETF is formally approved, so readers shouldn’t automatically assume the current rally will extend from here.

With Bitcoin entering an historically bullish period of its 4-year halving cycle and major central banks seemingly nearly done raising interest rates, there are bigger picture tailwinds for the price of the world’s largest cryptoasset as well.

Bitcoin Technical Analysis – BTC/USD Daily Chart

Source: TradingView, StoneX

As the chart above shows, Bitcoin has seen a big breakout above $32K to its highest level in nearly 18 months. The topside breakout follows a relatively shallow 38.2% pullback of the rally over the first half of the year, suggesting that the medium-term momentum remains with the bulls. As long as Bitcoin holds its breakout above the $32K area, there is room for continued strength toward $36K, the 38.2% retracement of the whole Nov. ’21 – Nov ’22 drop, followed by the $40K psychological level next.

Only a break back below $32K would erase the near-term bullish bias at this point.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter: @MWellerFX

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.