Bitcoin yesterday continued its climb toward all-time highs, bolstered by optimism over the upcoming launch of the first bitcoin futures exchange-traded fund in the US by asset manager ProShares.
Bitcoin, the largest cryptocurrency, rose as much as 2.6 percent in Asian trading yesterday and was hovering near US$62,600 as of 12:03pm in Hong Kong. It has more than doubled this year in volatile trading. The April record was just under US$64,870.
ProShares was to start the fund on the New York Stock Exchange yesterday, company chief executive Michael Sapir said in an interview.
The move is the latest sign of how cryptocurrency-related investments are becoming more mainstream.
“ETFs mean that this year bitcoin interest could see several billions of dollars come under management, which should keep the entire space buzzing,” Oanda Corp senior market analyst Edward Moya wrote in a note.
The prospect of increased interest in bitcoin from institutional and retail investors is bolstering the token, whose climb this year dwarfs the returns from traditional assets such as stocks, bonds and gold.
That is a marked change from the middle of the year, when worries about its energy usage and a harsh crackdown in China sent prices tumbling below US$30,000.
Other coins are also up so far this week, including the second-largest token, ether.
The Bloomberg Galaxy Crypto Index is at its highest level since May.
Cryptocurrency-linked stocks rallied on Monday, including exchange firm Coinbase Global Inc, miner Riot Blockchain Inc and Riot’s UK-based peer, Argo Blockchain PLC.
In Asia yesterday, Woori Technology Investment Co advanced.
The technical setup for bitcoin in its latest rally is a concern for Rick Bensignor, president of Bensignor Investment Strategies, who wrote in a note that being so close to highs might make him “think twice about buying bitcoin now.”
Noelle Acheson, head of market insights at Genesis Global Trading Inc, cautioned on likely demand for a futures-based bitcoin ETF.
“It’s another big step in the convergence between traditional and crypto markets,” she said. “I do think that there will be perhaps not quite as much monetary demand for this product as the market seems to be signaling.”
Genesis is affiliated with Grayscale Investments LLC, which said on Monday that it would seek to covert its bitcoin trust into an ETF.
Others are more upbeat — the futures-based bitcoin ETF could attract more than US$50 billion in inflows in its first year, given the hype surrounding it, bitcoin proponent Tom Lee, cofounder of Fundstrat Global Advisors, wrote in a note.
“Bitcoin is in a strong position as it challenges last resistance at US$64,000, above which a breakout will target US$100,000,” Evercore ISI technical strategist Rich Ross said. “The fourth quarter offers fertile ground for the most speculative.”
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