When it comes to Bitcoin, there are two primary types of ETFs available: spot ETFs and futures ETFs. Understanding the differences, advantages, disadvantages, strengths, and weaknesses of each can help investors make informed decisions about their Bitcoin investment strategies.

Spot ETFs: Simplicity and Transparency Spot ETFs track the price movements of the underlying asset, in this case, Bitcoin, by directly holding the physical asset. Here are the key aspects to consider:

Advantages:

1. Simplicity: Spot ETFs are relatively straightforward, as they aim to replicate the price of Bitcoin itself, making them accessible even to novice investors.
2. Transparency: Spot ETFs disclose their holdings daily, enabling investors to have a clear view of the assets included in the portfolio.
3. Liquidity: Spot ETFs are traded on stock exchanges, offering high liquidity and ease of buying and selling for investors.

Disadvantages:

1. Limited leverage: Spot ETFs do not typically provide leverage, meaning investors cannot amplify their exposure to Bitcoin beyond the amount invested.
2. Tracking error: Due to fees, market conditions, and timing differences, spot ETFs may experience tracking errors, resulting in deviations from the underlying asset’s performance.
3. Limited investment options: Spot ETFs are constrained by the available Bitcoin securities in the market, limiting investment opportunities compared to futures ETFs.

Futures ETFs: Leverage and Flexibility Futures ETFs, on the other hand, invest in Bitcoin futures contracts. Here’s what you should know about this type of ETF:

Advantages:

1. Leverage: Futures ETFs often utilize leverage, allowing investors to magnify their exposure to Bitcoin’s price movements and potentially enhance returns.
2. Flexibility: Futures ETFs offer access to a wide range of asset classes and commodities beyond traditional stocks and bonds, diversifying investment portfolios.
3. Enhanced market access: Futures ETFs provide exposure to assets that may be challenging to invest in directly, such as commodities or foreign indices, expanding investment opportunities.

Disadvantages:

1. Complexity: Futures ETFs involve more complex investment strategies, including managing futures contracts, which requires a deeper understanding of the derivatives market.
2. Higher risk: Due to the potential for amplified returns, futures ETFs are inherently riskier than spot ETFs, as losses can also be magnified, leading to significant declines in portfolio value.
3. Rolling contracts: Futures contracts have expiration dates and need to be rolled over into new contracts as they approach expiration. This process can result in additional costs and potential tracking errors for futures ETFs.

Buried Lede

Futures-based ETFs can experience erosion in value, even if the underlying asset appreciates, due to a phenomenon known as “contango” or “negative roll yield.” This occurs primarily in futures markets where the futures contracts have expiration dates and need to be rolled over into new contracts. Here’s why this erosion can happen:

1. Cost of Rolling Contracts: As a futures contract approaches its expiration date, the ETF must sell the expiring contract and buy a new one to maintain exposure to the underlying asset. However, if the new contract is more expensive than the expiring contract, the ETF incurs a cost known as the “roll cost.” This cost can erode the overall value of the ETF.
2. Market Conditions and Demand: The prices of futures contracts are determined by supply and demand dynamics. If there is strong demand for a particular futures contract, its price may be higher than the spot price of the underlying asset. This situation is known as “contango.” As a result, when the ETF rolls over its expiring contract into a more expensive contract, it effectively buys the underlying asset at a higher price, causing a loss in value.
3. Tracking Error: Futures-based ETFs aim to replicate the performance of the underlying asset by holding futures contracts. However, due to factors such as transaction costs, timing differences, and market conditions, the ETF may not perfectly track the underlying asset’s price. This tracking error can contribute to value erosion, especially when there are significant disparities between the ETF’s performance and the underlying asset’s performance.

It’s important to note that not all futures-based ETFs experience erosion in value. In some cases, when the futures market is in a state of “backwardation” (opposite of contango), where futures prices are lower than the spot price, the roll cost can be beneficial to the ETF, leading to a positive roll yield and potentially enhancing the ETF’s value.

Investors considering futures-based ETFs should be aware of these dynamics and carefully evaluate the fund’s investment strategy, cost structure, and historical performance to assess the potential impact of contango or backwardation on the ETF’s value.

Conclusion: When considering Bitcoin ETFs, whether spot or futures, it is crucial to assess your investment objectives, risk tolerance, and understanding of the underlying asset. Spot ETFs offer simplicity and transparency, while futures ETFs provide leverage and flexibility. However, futures ETFs come with higher complexity and risk factors. Ultimately, it’s essential to conduct thorough research, seek professional advice if needed, and align your investment strategy with your goals and risk appetite to make informed decisions in the dynamic world of Bitcoin ETFs.

The world of cryptocurrencies has experienced an incredible transformation since the inception of Bitcoin over a decade ago. While Bitcoin initially faced skepticism and doubts, it has steadily gained recognition as a viable asset class. In a significant move that signifies growing mainstream acceptance, financial powerhouses like Fidelity and other large firms have recently filed Bitcoin exchange-traded fund (ETF) requests with the U.S. Securities and Exchange Commission (SEC). This blog post explores the current state of Bitcoin and highlights the implications of these ETF filings.

Bitcoin’s Evolution as a Digital Asset

Bitcoin, the first decentralized digital currency, has come a long way since its introduction in 2009. Initially regarded as a niche technology, Bitcoin has now become a significant player in the financial world. Its decentralized nature, secure blockchain technology, and scarcity have attracted a substantial user base, including individuals, institutions, and even governments.

Bitcoin’s Price Surge and Wider Adoption

Bitcoin’s price has witnessed extraordinary volatility, including meteoric rises and sharp declines. However, in recent years, it has shown remarkable resilience and a strong upward trajectory. The most notable rally occurred in late 2020 and early 2021 when Bitcoin reached an all-time high of nearly $65,000.

This price surge has captured the attention of traditional financial institutions, leading to increased adoption of cryptocurrencies. As more individuals and businesses embrace Bitcoin, it has transitioned from a speculative asset to a potential long-term investment option.

Fidelity and Other Financial Giants Enter the Bitcoin ETF Arena

Fidelity Investments, a well-established name in the investment industry, filed for a Bitcoin ETF with the SEC in early 2023. This move by Fidelity signals a major shift in the perception of cryptocurrencies, as the firm manages trillions of dollars in assets and has a considerable influence on the financial markets. The Fidelity Bitcoin ETF aims to offer investors a regulated and accessible way to gain exposure to Bitcoin’s price movements without the need to hold the actual cryptocurrency.

Fidelity is not alone in recognizing the demand for Bitcoin ETFs. Other large financial firms, such as Black Rock, Invesco, and WisdomTree, have also submitted similar requests to the SEC. These ETF filings come as a response to the increasing demand from both retail and institutional investors seeking regulated investment vehicles that track the price of Bitcoin.

Implications of Bitcoin ETF Approvals

The approval of a Bitcoin ETF by the SEC would be a groundbreaking development for the cryptocurrency market. It would provide investors with a convenient and regulated means to invest in Bitcoin, potentially leading to increased liquidity, reduced volatility, and broader adoption. Furthermore, ETFs are well-established investment vehicles that are familiar to many investors, making Bitcoin more accessible to a wider audience.

Moreover, the introduction of Bitcoin ETFs would facilitate the entry of traditional financial institutions into the cryptocurrency market. Institutions that were previously hesitant due to regulatory concerns or operational limitations would now have a regulated avenue to participate in the Bitcoin market, potentially driving further institutional adoption.

Conclusion

The recent filing of Bitcoin ETF requests by financial giants like Fidelity, along with other firms, signifies a significant milestone for the cryptocurrency market. It reflects the growing acceptance and recognition of Bitcoin as a legitimate asset class. If approved, Bitcoin ETFs could provide a regulated and accessible investment avenue for both retail and institutional investors, leading to increased liquidity, reduced volatility, and wider adoption. While the SEC’s decision on these ETF applications is yet to be determined, the current state of Bitcoin appears to be on an upward trajectory, with the potential for even greater integration into the traditional financial system.

The next big event that could reverse the downtrend in BTC is the next halving. When is the Next Bitcoin Halving? The next Bitcoin halving is scheduled to take place in 2024 at block 840,000. The 2024 halving will likely occur between February 2024 and June 2024 and the Bitcoin block reward is scheduled to drop from 6.25 Bitcoin per block to 3.125 Bitcoin per block. In previous Halving events, there has been an anticipatory run up in price as the estimated time approaches.

Technically a break of the long downtrend line from the November 2021 highs would be a good time to buy. See the chart. Until wither of the aforementioned events occur, there’s no real urgency or FOMO.

While the price of bitcoin remains in a 10k trading range, here’s a look at some technical nuances of note. BTC continues to remain “in balance” building value. As the price tests the top of the range at 46k it can do one of three things.

1.) Break out and start a new up trend.

2.) Hit resistance and pull back into the trading range.

3.) Continue to trade at this level.

So, on another technical note, the 50 day moving average has crossed above the 21 day. Consider that a mild bullish sign.

As for correlations, here’s a chart comparing Bitcoin with Nasdaq 100 and the S&P 500.

Highly correlated obviously. After the first rate hike both the equity markets and Crypto market have rallied.

Since the start of 2022 Crude oil has been the clear winner. Gold as stayed flat whereas Bitcoin sold off. With war news stoking geopolitical instability fears and rampant inflation, Crude oil was clearly the beneficiary.

So the scenario from the previous post is playing out. 1.) BTC price “balances out” in market profile theory that simply means Bitcoin trades sideways at this level for a time, building value. Obviously, with the news, assets are under pressure. Interestingly the VIX volatility index is not violently ramping up. So far the selling has been orderly.

So. the last short term trendline failed. This is why I recommended putting in a stop if the trendline was broken in the previous post. As you can plainly see the January low has yet to be breached.

Possible trade entry for me.

1.) A speculative entry long trade just below 32933.33 and try to catch a potential double bottom.

2.) Enter long above the 9 day down trendline, if and when BTC price moves higher in the chart above.

One last thing. BTC seems to be highly correlated to the equity markets. To put into context how a non correlated asset class looks check out the price of GLD (gold). Gold has been rallying. Oil Same.

For those watching closely… Interesting potential trendline break of the downtrend in Bitcoin BTC.

On this daily chart above, note the potential trendline break to the upside. Could be a good time to take a flyer in Bitcoin (If and when). BTC looks to be trying to hammer out a bottom with higher lows forming a small uptrend. The down trend started in November ’21 peaking at 69000. It fell to 32933.33, a 53% crash.

This latest crash in Bitcoin is similar to what transpired last summer. In April ’21 BTC peaked at 64899 and fell to 28800 marking the low in June ’21, a 56% correction.

Two scenarios I see playing out. 1.) BTC price “balances out” in market profile theory that simply means Bitcoin trades sideways at this level for a time, building value. 2.) BTC breaks the down trendline and starts a new uptrend. The ideal way to trade it would be to buy on a back test of the trendline after breaking above it then pulling back. The buy point would be the bounce of the line. See the red arrows below.

A prudent stop loss could be entered if the price falls below the secondary uptrend line. The bearish price action could continue as it seems Bitcoin is positively correlated with the equity markets. It will be interesting to see if Crypto prices can decouple from equity price movement.

Here’s the hook straight from the project’s home page…

“Mining HNT is done by installing a simple device on your office window. That’s it. Seriously.”

Hotspots provide miles of wireless network coverage for millions of devices around you using Helium LongFi, and you are rewarded in HNT for doing this. And because of an innovative proof-of-work model (we call it “Proof-of-Coverage”), your Hotspot only uses 5W of energy

So, after a very long wait time I finally received two HNT Miners. Bobcat Miner 300 is a high-efficiency miner hotspot for HNT. It is compatible with Helium LongFi, an architecture that combines the leading wireless LoRaWAN protocol and the Helium Blockchain technology.

After many hours spent configuring the miner the results have been uninspiring. To be honest the mining rewards are very inconsistent for both miners.

Fun side hobby!

Running HiveOS mining ETH until POS @ 460mh

EVGA 3090 kingpin hybrid 121mh https://www.evga.com/products/product.aspx?pn=24G-P5-3998-KR Purchased directly from EVGA via notify que $2,089.99 8/18/21 Registered elite member.

EVGA 3090 FTW3 hybrid 121mh https://www.evga.com/products/product.aspx?pn=24G-P5-3988-KR

EVGA 3090 FTW3 121mh https://www.evga.com/products/product.aspx?pn=24G-P5-3987-KR

EVGA 3060 rtx 36mh https://www.evga.com/products/product.aspx?pn=12G-P5-3657-KR

EVGA 1080 TI FTW3 45mh https://www.evga.com/products/specs/gpu.aspx?pn=1190fbf7-7f11-465d-b303-cab0e50fbdc6 This was my first mining GPU. Purchased directly from EVGA for $879.99 2/15/2018

EVGA 1060 rtx 20mh lol https://www.evga.com/products/Specs/GPU.aspx?pn=36e35fed-3a47-48bc-b862-28fa49dd712a Purchased from Best Buy 519.99 also February 2018.

EVGA 1200 P2 power https://www.evga.com/products/product.aspx?pn=220-P2-1200-X1

EVGA 1300 P+ power https://www.evga.com/products/product.aspx?pn=220-PP-1300-X1

Motherboard

Z590 EVGA FTW WIFI https://eu.evga.com/products/product.aspx?pn=121-RL-E597-KR Purchased directly from EVGA

CPU 12 × 11th Gen Intel(R) Core(TM) i5-11600K @ 3.90GHz Amazon?

Memory G.Skill Trident Z Royal Series [Silver] 32GB (2 x 16GB) 288-Pin SDRAM (PC4-28800) DDR4 3600 CL19-20-20-40 1.35V Dual Channel Desktop Memory Model F4-3600C19D-32GTRS https://www.amazon.com/G-SKILL-Trident-288-Pin-Desktop-F4-3600C19D-32GTRS/dp/B07SQ3T4X3/ref=sr_1_3?crid=3N3C6LU0R693H&keywords=G.Skill+Trident+Z+Royal+Series+%5BSilver%5D+32GB+%282+x+16GB%29+288-Pin+SDRAM+%28PC4-28800%29+DDR4+3600+CL19-20-20-40+1.35V+Dual+Channel+Desktop+Memory+Model+F4-3600C19D-32GTRS&qid=1641929433&s=electronics&sprefix=g.skill+trident+z+royal+series+silver+32gb+2+x+16gb+288-pin+sdram+pc4-28800+ddr4+3600+cl19-20-20-40+1.35v+dual+channel+desktop+memory+model+f4-3600c19d-32gtrs%2Celectronics%2C80&sr=1-3

Open Rig Mining Frame https://www.aaawave.com/aaawave-12gpu-open-frame-mining-rig-frame-chassis-for-crypto-currency-ethereum-ravencoin-ergo-flux-conflux-zcoin/

Competitive Advantage: What sets DCG apart from legacy firms?

DCG follows an iterative design process, continually improving prototype strategies in response to real-time quantitative testing. So, we feel we are allowed to continually learn, and as a result we discovered an efficient use of capital methodology that improves every day. At DCG we are focused on developing low error processes. Our mission… Play the long game without ignoring short term performance.

DCG was built on real world testing. We test using clearly articulated strategies and quantifiable risk measures as we build holdings and enter and exit the markets in real-time.