With equity markets open just a half day, the day after Thanksgiving is usually a noneventful day in financial markets. However, something notable did occur last Friday: Bitcoin jumped to its highest prices in 18 months.
Bitcoin surged above $38,000 on November 24 for the first time since May 2022. In what could be a catalyst for exchange traded funds such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO), bitcoin’s albeit brief history indicates that when the cryptocurrency moves to $38,000, momentum will carry it beyond $40,000.
SATO’s largest holding is the Grayscale Bitcoin Trust (GBTC). The rest of the ETF’s portfolio is a slew of crypto-correlated equities. In other words, momentum for the largest digital currency can and often does matriculate down to assets such as SATO.
Other Indicators of More Potential Gains for SATO
Some investors want to assess the possibility of more near-term upside for bitcoin and SATO. The futures market might offer some clues.
“As for derivatives markets linked to Bitcoin, we may witness more momentum tomorrow and in the coming days. According to data provided by Deribit, tomorrow will be the execution date for what are equivalent of more than $4 billion worth of options contracts for Bitcoin, which they are more than 107 thousand contracts, which represent part of more than 14 billion options outstanding,” noted Samer Hasn, an analyst at XS.com. “This coincides with a further record rise in the value of open interests for Bitcoin futures contracts, which reached approximately $15.93 billion, which represents a new highest level not seen since April of last year.”
Another point in favor of SATO is that even with this year’s rally by bitcoin, one that’s recently intensified amid speculation that U.S. regulators will soon approve a spot bitcoin ETF, is that many cryptomarket participants aren’t selling into this rally. Rather, they’re standing pat or adding to exisiing positions, expressing devotion to the digital asset.
“What’s very encouraging for Bitcoin right now is 70% of on-chain supply has remain dormant for a year, a new record which tells us long-term Bitcoin holders are steadfast in their determination. It seems little will shake their resolve until prices are much higher,” said Antoni Trenchev, co-founder and managing partner at crypto lender Nexo, in an interview with Barron’s. “Bitcoin is on track for its third consecutive monthly gain. The last time it rose September through November in 2015 and 2016 it went on to log another positive month in December.”
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