Cryptocurrency update: Bitcoin stutters while Ethereum makes ground

Bitcoin starts the week in a subdued fashion, whereas Ethereum is hoping to quietly build gains going forward.

Cryptocurrency update

Bitcoin drops from all-time high while ETH makes ground

Bitcoin was flying last week, surpassing its all-time high records to reach a new peak above $65,000. But what goes up, must go down. Newton’s iron-clad laws don’t just apply to physical objects. Bitcoin and crypto ETFs rarely stay at peak performance forever.

As of Monday, Bitcoin had gained over 3% over its weekend value. The token was trading for $62,909 but had dipped below $60,000 for the first time since mid-October on Friday 22nd.

It’s hard to say what caused Bitcoin to fall away. We have seen in the past a significant drop off when a new high has been reached. The decline hasn’t been quite so drastic compared to April’s when prices fell from over $64,000 to under $30,000.

It does appear that complex rules in PureShare’s Bitcoin ETF and a subdued opening from the Valkyrie BTC on Friday have knocked some of the momentum out of the coin.

Ethereum, on the other hand, is quietly making new ground. The token reached a five-month peak last week and continues to trade strongly.

ETH, which is the world’s second-largest crypto coin by market capitalisation, reached $4,367 last Wednesday. It has managed to claw back weekend losses. As of Monday, Ethereum was trading for $4,133.

The Ethereum blockchain is currently undergoing major developments. Its owners promise power requirements can drop 99.9% upon Ethereum 2.0’s full implementation. Developers are also planning up the level of transactions on the platform from 30 per second up to 100,000, which may increase demand for ETH. Ethereum tokens are used to pay “gas” fees on the blockchain as a way of validating transactions.

There is plenty at work on Ethereum. Whether the token can close the gap on Bitcoin is another matter. At present, ETH’s market cap is around $500bn – less than half of Bitcoin’s total valuation.

Ethereum’s developers appear to be doing all they can to make the blockchain more useable. This in turn should lead to more use of ETH tokens, and potentially increase their value.

Valkyrie BTC ETF launch fizzles as BTC drops

While ProShares stole headlines and boosted Bitcoin with the launch of the US’ first BTC futures exchange traded fund, Valkyrie was not so lucky.

Valkyrie Investment’s Bitcoin Strategy ETF, which trades under the BTF ticker, launched just as Bitcoin prices were starting to turn last Friday. As prices fell, the fund fell with them. It had dropped nearly 3% from its $25 launch price when trading opened, before closing more than 4% down.

More than 3.1 million shares worth about $78 million changed hands during the session after BTF made its public debut.

It’s interesting. Maybe crypto ETFs are like busses. The US waits for years for one to show up, then two come at once. Only ProShares’ fund appears to be flying. Over $1 billion in assets were taken by its ETF within just two days of trading.

Are retail customers already getting wary of crypto ETFs? It seems the purest play to get exposure to Bitcoin would be simply just buy Bitcoin or trade futures using CFDs. Are funds really necessary? Maybe it’s just a question of public perception.

It’s still very, very early days for ETFs of this nature, at least in the US.

If anything, ProShares’ Bitcoin Strategy ETF is proving almost too popular…

ProShares asks CME for futures purchasing wager off the back of strong Bitcoin ETF debut

ProShares has asked the Chicago Mercantile Exchange to remove limits on the amount of new BTC futures customers can buy in the wake of its ETF’s popularity.

Starting with November’s front-end contract, the CME is implementing futures purchasing restrictions. Customers will be limited to buy 4,000 futures in the ProShares Bitcoin Strategy fund initially, dropping to 2,000 three days prior to expiration.

Total ownership is effectively limited to 20,000 Bitcoins. Each contract represents 5,000 BTC.

ProShares has already split its futures portfolio with half in October and half in November as a workaround.

ProShares could shift assets into later-dated contracts, structured notes or swaps, ProShares CEO Michael Sapir said. ProShares also says the fund could also invest in equities with crypto exposure.