The price of bitcoin, the world’s largest cryptocurrency by market cap, began climbing during the week of October 23 after spending much of the summer stuck around $26,000. It recently rose above $35,000 to touch its highest level since May 2022.
This post is part of Consensus Magazine’s Trading Week 2023, presented by CME.
Why is bitcoin appreciating?
Some point to signs that a slate of exchange-traded funds that hold actual bitcoin — known as spot bitcoin ETFs — may soon be approved by U.S. regulators. Such approval (if granted) will provide investors with additional products to access bitcoin exposure and may attract participants who may have been sitting on the side-lines .
The approval of the futures-based ProShares Bitcoin Strategy ETF (BITO) made history in October 2021 as one of the strongest-ever ETF launches, amassing more than $1bn in assets in just two days, and continuing to attract interest.
Another popular theory is tied to bitcoin’s upcoming “halving.” This pre-programmed adjustment to the blockchain cuts in half the reward miners receive for processing transactions and creating new bitcoin from the current 6.25 to 3.125 bitcoin per block. This event occurs after 210k blocks are mined or about every four years until the maximum supply (21MM) is reached. The next halving, Bitcoin’s fourth, is expected to happen by mid-April 2024.
In the past, this event and the associated supply reduction has coincided with a strong run-up in bitcoin’s price and could potentially lead to pre- and post-halving volatility. The geopolitical and macro backdrop for the upcoming halving is very different from previous ones and the availability of regulated, robust and liquid Bitcoin futures and options from CME Group means firms have trusted and tested products to hedge theirbitcoin pricerisk or gain exposure.
Use futures to position your portfolio
Investors who trade in the futures market usually have one of two aims: to either hedge the price of an asset by locking in a future price or to speculate on the price direction of an asset to seek to profit from the ups and downs of futures prices.
CME Group Bitcoin and Micro Bitcoin and futures and options can help investors navigate cryptocurrency market risks and potentially profit from its opportunities. Micro Bitcoin futures traded volume…
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