Bitcoin is back above the $60,000 level as stock market strength boosts the world’s largest digital currency.
BTCUSD – Daily Chart
The price of BTC trades at $63,473 and has resistance just above $65,000. The larger target to the upside would be just ahead of the $70,000 level.
Digital asset investment products saw a second straight week of inflows, with a net of $321 million, according to crypto asset manager CoinShares.
CoinShares said the 50 basis-point interest-rate cut by the Federal Reserve has added to positive sentiment about holding non-yielding assets.
Bitcoin-linked products were at the forefront of inflows with $284 million, while Ethereum saw outflows of $29 million. This was the fifth consecutive week that ETH products had registered outflows, even as the second-largest cryptocurrency led gainers after the Fed move.
“This is due to persistent outflows from the incumbent Grayscale Trust and scant inflows from the newly issued ETFs,” CoinShares wrote.
Ethereum exchange-traded funds have consistently underperformed bitcoin ETFs since they were listed in the US in July. Their first five weeks of trading saw $500 million outflows, while their BTC counterparts experienced more than $5 billion of inflows during their first five weeks.
JPMorgan said bitcoin’s “first mover advantage,” the lack of staking provision in ETH products and lower liquidity, made them less appealing to institutional investors.
Meanwhile, BTC was also boosted by news that BlackRock’s ETF on the coin has been approved for options trading by the US regulator. There is a belief that (NYSE:IBIT) options will further help draw institutions to the crypto market.
Jeff Park, portfolio manager at Bitwise Asset Management, said IBIT options could also create a gamma squeeze.
“Bitcoin options have negative vanna: as spot goes up, so does volatility, meaning delta increases even faster. When dealers [market makers] who are short gamma hedge this (gamma squeeze), bitcoin’s case becomes explosively recursive. More upside leads to even more upside as dealers are forced to keep buying at higher prices. A negative vanna gamma squeeze acts like a refueling rocket,” Park said on X.
“With bitcoin options, investors can now make duration-based portfolio allocation bets, especially for long-term horizons. There’s a good chance that owning long-dated OTM calls as premium spend will give investors more bang for their buck than a fully-collateralized position that could drop by 80% over the same period,” Park said.
Bitcoin should remain supported as stocks move higher, and investors should keep an eye on developments in the options market for the digital currency.
