A Tuesday tumble briefly took the largest cryptocurrency below $100,000 for the first time since June . That confirms bitcoin is in a bear market. Compounding those woes is that it performed poorly in October. And that’s usually one of the strongest months of the year for the digital currency.
Accounting for those factors and the ongoing U.S. government shutdown, which some market observers see as a drag on the cryptocurrency complex, it’s not surprising some investors are rushing to get involved with bitcoin and ETFs like the Invesco Galaxy Bitcoin ETF (BTCO). However, history confirms periods of bitcoin retrenchment in the confines of longer-ranging bull markets have often proven to be buying opportunities.
Will that scenario play out again this time around? Some market observers believe it will. That indicates investors may want to examine the $657 million BTCO before a fresh rally is confirmed.
Interesting Reasons to Back BTCO
Noted crypto expert Arthur Hayes points out in a new essay that domestic monetary policy is supportive of bitcoin upside. That indicates the aforementioned pullback, while painful, could also morph into a buying opportunity.
“If government borrowing continues as forecast by the Too Big to Fail (TBTF) Banks, the US Treasury Department, and the Congressional Budget Office, then the Fed’s balance sheet will grow as well. If the Fed’s balance sheet grows, that is dollar liquidity [positive. And that] ultimately pumps the price of Bitcoin and other cryptos,” observed Hayes.
The Bitmex founder made other comments supportive of this pullback being a buying opportunity. That potentially signals a rebound is imminent for ETFs like BTCO.
[“The four-year cycle anniversary of the 2021 Bitcoin all-time-high is nigh. Many] will mistake this period of market weakness and ennui as the top and dump their stack,” added Hayes. “That is a mistake, the dollar money market plumbing doesn’t lie. This corner of the market is shrouded in obtuse [jargon. Once] you translate the lingo into print money or destroy money, it becomes quite easy to know how to dance.”
A variety of factors could help BTCO recover and rally into year-end. Those include include another Fed interest rate cut, a dramatic decrease in margin liquidations, and market participants who were previously long-term bitcoin holder hitting the breaks on sales.
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