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Monday 15 January 2024
Daily Technical Trading Strategies
We provide Financial Market Analysis, Trading Education, and Reviews of only Regulated and the most Trusted Forex, CFD, and Crypto brokers.
Friday 12 January 2024
Bitcoin ETFs Record $4.6 Billion Volume on Debut Trading Day: GBP/USD Climbs After UK Data
U.S.-based Bitcoin Exchange-Traded Funds (ETFs) experienced an impressive trading volume of $4.6 billion on their debut day.
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This surge in investor interest followed the approval of these landmark products by the U.S. securities regulator. This development represents a significant milestone for the cryptocurrency industry, challenging the perception of digital assets as risky investments.
As of today, the price of Bitcoin stands at $46,046.38, marking a slight decrease of 0.50%.
BTCUSD Daily Chart
The Players in the Market
Eleven spot Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, commenced trading, instigating a fierce battle for market dominance. Leading the pack in trading volumes were Grayscale, BlackRock, and Fidelity, according to LSEG data.
Regulatory Approval and its Impact
The U.S. Securities and Exchange Commission finally gave the go-ahead for these products after a decade-long standoff with the crypto industry. However, SEC Chair Gary Gensler clarified that this approval does not constitute an endorsement of Bitcoin, labeling it as a “speculative, volatile asset.” Nevertheless, the launch of the ETFs bolstered Bitcoin’s price to its highest level since December 2021.
Fee Adjustments and Market Competition
The regulatory approval ignited intense competition among issuers, prompting some to reduce their product fees below the U.S. ETF industry standard even before the launch. Fees for the new Bitcoin ETFs vary from 0.2% to 1.5%, with several firms offering fee waivers for a specific duration or asset volume.
The World’s Largest Bitcoin ETF
Grayscale received the green light to transform its existing Bitcoin trust into an ETF, thereby instantaneously establishing the world’s largest Bitcoin ETF with over $28 billion in assets under management. Market participants keenly observed bid-ask spreads as the ETFs commenced trading.
Caution Amid Euphoria
Despite the excitement surrounding the approval, some analysts warned of potential premature euphoria. The broader investment community continues to perceive cryptocurrencies as risky, particularly in light of recent scandals such as the collapse of the FTX crypto exchange in 2022.
Crypto Stocks and Future Prospects
Crypto-related stocks initially surged but ended the day lower. However, many anticipate these products to set the stage for more innovative crypto ETFs, including spot ether products. Grayscale CEO Michael Sonnenshein revealed plans to file for a covered call ETF, enabling investors to generate income from options on its spot Bitcoin product.
What is a Bitcoin ETF?
A Bitcoin Exchange-Traded Fund (ETF) is an investment vehicle that tracks the performance of Bitcoin as an underlying asset. It’s a publicly traded fund that enables investors to gain exposure to Bitcoin’s price movements without directly owning the cryptocurrency. Bitcoin ETFs are similar to other ETFs that track assets like stocks, currencies, or precious metals. They operate as trusts managing pools of Bitcoin and issuing shares to investors.
How to Invest in a Bitcoin ETF
Investing in a Bitcoin ETF is a straightforward process, similar to investing in any other ETF or stock. After opening a brokerage account, you can place an order to purchase shares of the Bitcoin ETF. These shares represent a portion of the fund’s holdings in Bitcoin. The number of shares you can buy depends on the ETF’s current price and the amount you wish to invest.
Where to Buy a Bitcoin ETF
Bitcoin ETFs trade on traditional market exchanges rather than on cryptocurrency exchanges. Therefore, you can purchase Bitcoin ETFs through any brokerage firm that has access to these exchanges. Some popular online brokerage firms include those trading on NYSE Arca, an electronic securities exchange in the U.S.
How to Buy a Bitcoin ETF
To buy shares in a Bitcoin ETF, start by opening a brokerage account if you don’t already have one. Once your account is set up, use the ETF’s ticker symbol to search for it on your broker’s platform. Decide how many shares you want to buy, then place your order. Depending on your broker’s options, you may be able to place a market order (buying at the current market price) or a limit order (buying only when the ETF reaches a price you specify).
Other Market News
EUR/USD Consolidates Below 1.1000 Amid Subdued US Dollar
The EUR/USD currency pair has been consolidating its recent gains, maintaining a position below the 1.1000 mark. This comes as the US Dollar struggles due to expectations of a dovish approach from the Federal Reserve. However, escalating geopolitical tensions are restricting further upward movement for the pair. The upcoming release of producer inflation data from the US is now in the spotlight.
EURISD Daily Chart
The Impact of US Inflation Figures on EUR/USD
Thursday saw increased market volatility following the release of mixed inflation figures from the US. The Consumer Price Index (CPI) rose by 3.4% year-on-year in December, surpassing the market expectation of 3.2%. The Core CPI, which excludes volatile food and energy prices, matched analysts’ estimate with a monthly rise of 0.3%. Looking forward, the Producer Price Index (PPI) is predicted to increase by 1.3% in December. If this forecast is exceeded, concerns over stronger producer inflation could intensify, making it harder for the Fed to control consumer inflation and putting pressure on EUR/USD.
GBP/USD Holds Above 1.2750 After UK Data Release
The GBP/USD pair is trading within a narrow channel above 1.2750. Data from the UK revealed that the real GDP grew by 0.3% monthly in November, while Industrial Production contracted by 0.1% annually. Market attention now shifts to the upcoming release of US PPI data.
GBPUSD Daily Chart
UK Economy Sees Marginal Growth in November, Recession Fears Loom
The UK’s economy exhibited a slightly stronger than anticipated growth in November, but the threat of a recession looms large. This potential downturn could pose a significant challenge for Prime Minister Rishi Sunak ahead of the expected 2024 elections.
GDP Expands by 0.3% in November, Outpacing Predictions
The country’s Gross Domestic Product (GDP) saw a 0.3% expansion in November, recovering from a 0.3% drop in the previous month, according to data released by the Office for National Statistics (ONS).
Output Shrinkage and the Threat of Technical Recession
However, the economy’s output reduced by 0.2% in the three months leading up to the end of November, surpassing the expected 0.1% decline. The ONS suggests that a contraction or even stagnant output in December could result in a second successive quarter of declining output—signifying a technical recession.
Economic Challenges and the Impact on Sterling
“The lacklustre performance of the economy in November suggests the UK may well have slipped into a recession during the second half of 2023,” commented Ben Jones, an economist at the Confederation of British Industry. Following the release of the data, Sterling experienced a slight dip against the U.S. dollar.
Struggles Amid Rapid Inflation and High Interest Rates
Throughout 2023, the UK economy grappled with gaining momentum as households faced the pressures of rapid inflation and the highest Bank of England (BoE) interest rates in 15 years.
A Closer Look at November’s Economic Output
Data from Friday revealed that November’s economic output was marginally higher by 0.2% compared to a year ago and has only grown by 2.5% since 2019. “The longer-term picture remains one of an economy that has shown little growth over the last year,” stated ONS chief economist Grant Fitzner. However, he also noted, “GDP bounced back in the month of November, led by services with retail, car leasing and computer games companies all having a buoyant month.”
Gold Prices Boosted by Middle East Tensions, Awaiting US PPI Data
Gold prices have seen an upswing for the second consecutive day, benefiting from heightened safe-haven demand due to escalating geopolitical tensions in the Middle East. Despite this, the commodity remains below the $2,040-2,042 threshold, suggesting caution for investors given the uncertainty surrounding the Federal Reserve’s rate cut path.
XAUUSD Daily Chart
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We provide Financial Market Analysis, Trading Education, and Reviews of only Regulated and the most Trusted Forex, CFD, and Crypto brokers.