9th November 2021 > > Exchange traded funds.

tl;dr

Some technical analysis (TA) and Van Eck's failed BTC spot ETF.

Market Snap

Market Wrap

Wake up! Wake up!

A new ATH at $68,525 has the crypto press getting excited about PlanB’s stock to flow prediction of $98k by year-end.

Instead, I would point out that exchange balances of BTC are at record lows of 12.9% of total supply, suggesting that holders are not interested in selling in the short-term.

Curious Cryptos’ Technical Analysis – Meet Larry, our resident Technical Analyst

So Mark, to try and firm up readers faith in Technical Analysis, I’m going to do something that I am very much against – using it to make a price prediction.

If my prediction is completely off, I will only concede that TA should not be used for price prediction, which is what I say anyway. Of course, if the prediction is correct, I would have you believe TA is useful. So no real downside for me.

Below is the BTC chart. It shows a perfect breakout from a bull pennant pattern. The yellow line up to the price target is the way you use this pattern – you take the “flag-pole” and move it to the point of breakout.

Based on this pattern, my prediction is that BTC will reach $90k-ish without any major price correction that breaks the pattern. TA generally doesn’t make time predictions but for the sake of utility, I’ll say “DECEMBER”.

So now I have two reasons I want BTC to go to $90k.

Curious Cryptos’ Commentary – Van Eck exchange traded fund (ETF)

Regular readers know that the only BTC ETFs approved in the US are futures-based products. These ETFs will underperform – and probably quite significantly underperform – the physical, spot price of BTC.

The key reason for this is because of the effect of contango (see CCC 21st & 24th October 2021) exacerbated by the need of the funds to buy further down the maturity curve than simply the next rolling monthly contract.

…

Van Eck’s application for a physical, spot-based ETF has been continually delayed by the SEC all year.

Gary Gensler, chair of the SEC, has made public his belief that consumer protection is far greater for futures-based products than spot-based products.

Frankly I don’t agree with him in the context of the additional costs incurred by futures products, but I concede there is no right or wrong answer.

This is a matter of opinion (please don’t tell the woke twitterati that sometimes life isn’t black and white but full of nuance, they simply won’t understand what you are on about) and to be fair, in the world we live in today, Gary’s opinion carries more weight than mine, for now at least.

The very final deadline for approval or rejection for Van Eck’s BTC ETF is up this weekend (*).

Approval or rejection of the Van Eck BTC ETF could lead to significant price action, one way or the other. With perpetual funding rates as high as they are, expect cascading long liquidations on a down move.

Long-term holders aren’t worried by this – any sell-off is simply a chance to add more.

Those of a sensitive disposition who become emotional and fearful on the down moves, probably shouldn’t be involved in the first place.

(*) As a caveat, the SEC can always decide to ride roughshod over its own rules, and simply delay again.