Smart Money Front Running Retail Bitcoin


November 1, 2021

Cycling On-Chain is a monthly column that uses on-chain and price-related data to better understand recent bitcoin market movements and estimate where we are in the cycle. This sixth edition discusses the impact of the newly launched futures ETFs, last month’s all-time high, sell pressure from miners and long-term bitcoin holders, retail activity and concludes with the results of our monthly poll and halving cycle roadmap.

Bitcoin ETF Sparks Bitcoin Futures Demand

Early October 2021, rumors popped up that a futures-based bitcoin ETF might be accepted. This came into fruition when the ProShares Bitcoin Strategy ETF became the first U.S. bitcoin ETF to start trading on October 19. Despite this ETF being a highly anticipated product, its reached trading volumes and assets under management during the first few days surprised many. A second ETF was launched not long after, in what appears to be the start of a new flow of institutional bitcoin-related vehicles that are coming to market. The launch of these futures ETFs attracted a lot of demand for bitcoin futures, most likely by institutions that were interested in getting bitcoin exposure but were not able or allowed to directly buy the asset itself or use other previously existing products. The impact of this new inflow of market participants is particularly visible in the amount of open interest on CME’s bitcoin futures that were heavily bought up by the ProShares Bitcoin Strategy ETF (figure 1).

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