October 19, 2021
A Record ETF-Launch and Bitcoin Closing in on Its All-Time High
Introduction
It seems like a good part of Crypto Twitter is hanging out at crypto meetups in Dubai or Lisbon since it hasn't been as quiet in quite some time 😀 Or maybe everyone needs a bit of rest after the turbulent price action of the last weeks and before the next major market move?
One way or another, it seems like many traders are in a wait-and-see approach, attentively monitoring how the launch of the first Bitcoin ETF in the US plays out this week – or today for that matter since its launch day!
The First Bitcoin ETF Is Trading
“ETF, ETF, ETF…” It has been a lot of talk about the Bitcoin ETF lately and this will certainly change at some point. However, given that it’s such an important event, it makes sense to have a close eye on today’s Bitcoin ETF launch as it could give us clues to how this historic, new instrument will be adopted by traditional markets and how it could affect the crypto markets going forward.
While many were afraid of a sell-the-news event (mainly because of historic precedents like the CME Futures launch which marked the macro top in 2017), others expect this to be a major inflection point that will catalyze huge capital inflows into the cryptocurrency space. On-chain metrics unquestionably favor the latter but having an eye on sentiment and leverage will help navigate through short-term price moves.
After less than an hour of trading, it has become clear: There is massive demand for the new Bitcoin Futures ETF.
By the way, if you haven’t already seen the ticker of the second Bitcoin ETF to be launched this week:
Market Outlook
The last two days’ cooldown in the crypto markets has been remarkable so far: No major sell-off or massive liquidations but an “orderly closing of longs” and some minor profit-taking.
This is exactly what we want to see to avoid a massive leverage-induced shakeout, and it sets a base for further positive price action – potentially alleviating the need for a more prolonged correction… for now.
The market looks healthy here, although still quiet. Eerily quiet for being a light breeze away from the all-time high.
Historically, Bitcoin always needed some time from retesting old all-time highs to successfully breaking them. Thus, a couple of weeks of consolidation below $65k could be in the cards. However, things might also move faster this time with the Bitcoin ETF as a significant catalyst!
Fun fact: In some countries, Bitcoin has already broken its all-time high… Just not in the US due to the recent strength of the DXY (performance of the US Dollar vs other major currencies).
Interestingly, it seems like most of the recent price action is dictated by long-term holders (who have been aggressively accumulating over the last few months) as well as institutional capital (aka “smart money”) buying in. Major retail participation is not yet visible and will likely set in once Bitcoin has broken its all-time high…
How Long Do We Have to Wait for the Next Alt-Season
Right now it’s undoubtedly “Bitcoin season”. Just like we saw late last year, Bitcoin is leading the crypto markets attracting billions of dollars into the crypto space. The Bitcoin dominance is obviously rising in lockstep.
What came next oftentimes (e.g. last January to May) was an altcoin season of gigantic proportions. With all the innovation happening in the L1, DeFi, and NFT space right now, there is no question that a good chunk of the fresh capital attracted by Bitcoin will ultimately pour into altcoins at some point – the question is when.
While many expect Bitcoin dominance to keep making new highs and sucking the air out of the altcoin space for months to come, there are also contrarian voices:
While we might not see a full-blown alt-season (where everything pops off left and right) for some time, it is highly likely that we will continue to see certain narratives produce massive gains (e.g. “DeFi 2.0”, Polkadot season, etc.). Continued massive incentive programs as the one just announced by Polkadot founder Gavin Wood will keep the excitement for L1s going for the coming weeks and months.
Facebook Backpedaling to a Permissionless Blockchain (Ethereum)
It has been quiet around Facebook’s crypto ambitions lately after the social media giant had announced its plans many months ago and faced a lot of backlash from regulators and politicians. Now, Facebook seems to be ready to make its next moves, pushing both its Metaverse and crypto wallet ambitions ahead!
What is most important about today’s Facebook news is that the trials will include USDP, an established stablecoin living on the Ethereum blockchain. Apparently building a cryptocurrency wallet and plugging into the limitless potential of open blockchains (aka Ethereum) has turned out to be the most suitable approach for the tech giant (although Facebook’s plans to create their own stablecoin, Diem, are still pending).
Would you and I trust Facebook with our money? Probably not. But don’t underestimate the huge onboarding effect Facebook will have by introducing millions of people to the world of crypto! Facebook will be a massive onramp for many to experience the power of stablecoins – and eventually crypto.
The Fantom Ecosystem Is Chugging Along Nicely
An ecosystem largely unimpressed by the last days’ market-wide cooldown has been Fantom. Both the FTM price as well as the overall ecosystem have continued on their upward growth trajectory.
