Bitcoin’s (BTC) price has been consistently rallying in the past few weeks, reaching its latest new high of around $57,500 on Feb. 20.
The week has seen more bullish news such as the first German listed company allocating its cash reserves to BTC as well as the launch of the first Bitcoin ETF in Canada, which traded over $220 million in its debut.
Such news is fueling the price of Bitcoin while Elon Musk has also embraced the latest “laser eye” meme to the joy of hodlers who are itching for a $100,000 BTC price. However, the next major point of interest is at around $63,000 and this could be reached relatively soon if Bitcoin can hold above a few key support levels.
Bitcoin continues rally by holding critical levels
XBT/USD 4-hour chart. Source: TradingView
The 4-hour chart for Bitcoin shows a clear upward path since it broke out of the range construction between $30,000 and $42,000. Since then, crucial levels at $44,000 and $50,000 held as support, which served as the launchpad for the current highs above $55,000.
This run is also being driven by the decreasing reserves on exchanges. This is very similar to the end of 2016 when more Bitcoin was withdrawn from exchanges than deposited. These withdrawals mean that people want to hold their Bitcoin for the long term, indicating strong demand and low time preference.
During the recent rally, the first Fibonacci level at 1.618 was reached. Now, Bitcoin is nearing the second point of interest at the 2.618 Fibonacci level around $63,000.
On the downside, the $50,000 level is crucial on the 4-hour chart. If that sustains support, there’s a high chance Bitcoin’s price will reach that level next. However, if it loses $50,000, more downside to $43,000 can be expected.
Total crypto market cap reaches $1.7 trillion
Total market capitalization cryptocurrency 1-week chart. Source: TradingView
The total cryptocurrency market capitalization is approaching the $2 trillion mark in this cycle, which many people wouldn’t have expected last year.
However, after breaking the all-time high of 2017, the next level of interest was the $1.2 trillion level, which is also the 1.618 Fibonacci area.
That zone was broken to the upside and the market cap is now aiming for $1.85 trillion, the 2.618 Fibonacci level. The chart also shows a massive gap between the 21-Week MA and the current price, suggesting that the rally might be getting overextended.
Historically, the end of February and the month of March have not been bullish for the market, so a correction should not come as a surprise. In that case, a retest of $1.2 trillion is definitely on the table.
Crucial levels to watch for BTC price
XBT/USD 4-hour chart. Source: TradingView
In trading, it’s all about holding critical support levels for further upward or downward momentum. In this case, the first key levels are found between $43,000-44,000 and the second one at $50,000.
The same, however, can also now be said about the $55,000 level on low timeframes — in this case, the 1-hour candle chart. If that’s lost, there’s a gap to the next area of support, which means that a breakdown to the $50,000 level can then be expected.
However, as long as $55,000 is held, there is nothing that is holding Bitcoin’s price back from reaching the next Fibonacci level at $63,000.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Here’s how the Purpose Bitcoin ETF differs from Grayscale’s GBTC Trust
Published
1 hour ago
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February 28, 2021
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Since 2017, investors have been anxiously awaiting a Bitcoin ETF approval as the existence of such a fund was an important symbol of mass adoption and acceptance from the realm of traditional finance.
On Feb. 18, the Toronto Stock Exchange hosted the official launch of the Purpose Bitcoin ETF and the fund quickly absorbed more than $333 million in market capitalization in just two days.
Now that the long-awaited Bitcoin ETF is here, investors are curious about how it will compete with Grayscale Investments GBTC fund. On Feb. 17, Ark Investment Management founder and CEO Cathie Wood said the likelihood that U.S. regulators will approve a Bitcoin exchange-traded fund has gone up.
Although exchange-traded funds (ETF) and exchange-traded notes (ETN) sound quite similar, there are fundamental differences in trading, risks, and taxation.
What is an exchange-traded fund?
An ETF is a security type that holds underlying investments such as commodities, stocks, or bonds. It often resembles a mutual fund, as it is pooled and managed by its issuer.
ETFs have become a $7.7 trillion industry, growing by 65% in the last two years alone.
The most recognizable example is the SPY, a fund that tracks the S&P 500 index, currently managed by State Street. Invesco’s QQQ is another EFT that tracks U.S.-based large-capitalization technology companies.
More exotic structures are available, such as the ProShares UltraShort Bloomberg Crude Oil ($SCO). Using derivatives products, this fund aims to offer two times the daily short leverage on oil prices.
What is an exchange-traded note?
Exchange-traded notes (ETN) are similar to an ETF in that trading occurs using traditional brokers. Still, the difference is an ETN is a debt instrument issued by a financial institution. Even if the fund has a redemption program, the credit risk relies entirely on its issuer.
For example, after Lehman Brothers imploded in 2008, it took ETN investors more than a decade to recoup the investment.
On the other hand, buying an ETF gives one direct ownership of its contents, creating different taxation events when holding futures contracts and leveraging positions. Meanwhile, ETNs are taxed exclusively upon sale.
GBTC does not offer conversion or redemption
Grayscale’s Bitcoin Trust Fund (GBTC) is the absolute leader in the cryptocurrency market, with $35 billion in assets under management.
Investment trusts are structured as companies — at least in regulatory form — and are ‘closed-end funds.’ Thus, the number of shares available is limited and the supply and demand for them largely determines their price.
Investment trust funds are regulated by the U.S. Office of the Comptroller of the Currency (OCC), therefore outside the Securities and Exchange Commission (SEC) authority.
GBTC shares cannot easily be created, neither is there an active redemption program in place. This tends to generate significant price discrepancies from its Net Asset Value, which is the underlying BTC fraction represented.
An ETF, on the other hand, allows the market maker to create and redeem shares at will. Therefore, a premium or discount is usually unlikely if enough liquidity is in place.
An ETF instrument is far more acceptable to mutual fund managers and pension funds as it carries much less risk than a closed-ended trust like GBTC. Retail investors may not have been aware of the possibility that GBTC trades below net assets value. Thus the recent event might further pressure investors to move their position to the Canadian ETF.
To sum up, an ETF product carries a significantly less risk due to greater transparency and the possibility to redeem shares in the case of shares trading at a discount.
Nevertheless, the impressive GBTC market capitalization clearly states that institutional investors are already on board.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
The recent push to the $1 trillion bitcoin market cap can at least be partially attributed to institutional investors; firms investing on the behalf of others or as part of their asset allocation strategies.
Square, One of the Largest Corporate Holders of Bitcoin
Alongside MicroStrategy, now Tesla, Square is one of the largest institutional purchasers of the asset. However, unlike these other two companies – Square purchases bitcoin to provide it to its users directly through its app. A potential signal on the strong retail interest behind bitcoin, a driving force behind Bitcoin’s rally to $57K.
The CEO of Square, the publicly traded financial payments company, aiming to disrupt traditional finance, Jack Dorsey, is a staunch supporter of bitcoin.
Bitcoin, Blockchain and the Black Community – CoinDesk https://t.co/3KH6W7Rg0Q
“Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose”
In January, one million users bought bitcoin for the first time last month through Square’s Cash App, with 24 million monthly users on Cash App, this is still a 23 million user untapped source of investors for Bitcoin.
Possibly to capitalize upon this and expand its Bitcoin revenues, in its fourth quarter release Square announced another $170 million purchase of BTC.
Square is estimated to have paid $51,000 per BTC based on its timing in Q4. Bitcoin is currently at $44,800 at the time of writing, meaning that their position is down ~12% since the time of purchase. However, Jack Dorsey and the Square leadership indicate no signs of wanting to sell their large position, which offers both a message of hope and possible concern for the average retail investor. Square, as a public company, is first obligated to its shareholders – and if leadership came under pressure from its other institutional shareholders to sell the asset if it declined dramatically in price due to volatility, this event may cause a weakening in the market and trigger a further sell-off.
But if shareholders and leadership are more optimistic about the asset’s price, it may buy other Bitcoin with its reserve capital to DCA (dollar cost average) into its position, increasing demand and pushing the price up.
A significant concern with institutional purchasing, such as with Square, is that it defeats the purpose of Bitcoin’s inherent decentralized nature by concentrating tokens into centralized financial organizations. But for the mass adoption needed to truly cement BTC as a store of value, acquisitions such as these done by Square are helpful and frankly necessary.
Bitcoin investors should keep a careful watch on the future purchases of Square and the value of its total holdings to gauge possible market action.
Google Finance adds dedicated ‘crypto’ tab featuring Bitcoin, Ether, Litecoin
Published
3 hours ago
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February 28, 2021
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Google Finance has added crypto prices to the finance.google.com domain. The section, titled “Crypto,” now appears in the “Compare Markets” category alongside conventional stock and currency markets. The section provides key pricing information for various cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).
Google Finance users can now track the performance of various cryptocurrencies in just one click.
Google’s parent, Alphabet, also owns video platform YouTube — which has consistently irked crypto users by banning educational and news content, often seemingly at random. Cointelegraph and CoinDesk, the two largest publications in the crypto news space, have both been subject to suspensions that have subsequently been overturned after the video streaming platform confirmed they were not in violation of YouTube’s terms of service.
The cryptocurrency market has attracted mainstream attention over the past year, as institutional investors and corporations have started to invest in the asset class. Their involvement helped launch the cryptocurrency market cap past $1 trillion in January. The crypto market cap would eventually peak north of $1.7 trillion in February before experiencing a pullback. At current values, the digital asset class is worth over $1.4 trillion.
Both retail adoption and institutional interest has been growing rapidly over the last three months. And with major firms like Tesla and Mastercard actively embracing cryptocurrencies, the need for clearer regulation is growing, according to United States Securities and Exchange Commissioner Hester Peirce.
Calls for clearer guidelines on digital assets will likely grow louder as the bull market heats up. In the meantime, Peirce says, the new Biden administration can provide a fresh look at the regulatory aspect.