Source: PaxForex Premium Analytics Portal, Fundamental Insight
Cryptocurrency traders will get their long-awaited Bitcoin ETF today. After the SEC approved the ProShares Bitcoin Strategy ETF, retail trades pushed Bitcoin to new all-time highs. While the excitement is understandable, caution is advised before jumping into headline trading. The ETF, under the ticker BITO, will start trading on the New York Stock Exchange. It will invest and track Bitcoin futures contracts and not purchase the cryptocurrency directly. A futures contract is a legal obligation to deliver physical Bitcoin at a future date at the agreed price, but it presents a less efficient form of Bitcoin ownership.
The idea behind BITO is to give traders exposure to the cryptocurrency from their brokerage accounts without opening accounts at less secure and sometimes opaque cryptocurrency exchanges like Coinbase. Since BITO invests in futures, it offers a more complex and less straightforward exposure than buying Bitcoin outright. While retail traders cheer the development, and it may mature into the initial step towards a physical Bitcoin ETF with almost a dozen applications pending SEC approval, institutional investors remain concerned.
Costs for BITO will also be higher compared to a spot Bitcoin ETF. Many registered investment advisors voiced their concerns. Besides costs, tracking errors asset limitations were factors pointed out by professional traders. BITO is a step in the right direction but ranks as the third-best option. Today’s trading sessions may see high demand. It could fizzle out shortly, and Bitcoin remains vulnerable to a short-term correction into its Impolitic Kinko Hyo Cloud over the medium term. The long-term outlook remains bullish, and if positive developments continue, Bitcoin is on track to breach the long-awaited 100,000 level by the end of 2022.
The forecast for the BTC/USD turned cautiously bearish after the Kijun-sen entered a sideways trend, confirming the lack of short-term bullish momentum. Price action may grind marginally higher with the Tenkan-sen ascending, but the Senkou Span A of the Ichimoku Kinko Hyo Cloud is flat. This cryptocurrency pair remains vulnerable to retracement. A negative divergence formed in the CCI after it reached extreme overbought territory, and a breakdown below 100 will deliver the final sell signal for Bitcoin. Can bears regain control over price action and pressure the BTC/USD into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the BTC/USD remain inside the or breakdown below the 59,220 to 64,300 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ $62,410
- Take Profit Zone: $45,070 – $47,890
- Stop Loss Level: $65,530
Should price action for the BTC/USD breakout above 64,300, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Short Position @ $65,530
- Take Profit Zone: $68,150 – $70,200
- Stop Loss Level: $64,300
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
