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Bitcoin Up, Bitcoin Down: Reading the Swings

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Swinging prices

The price of bitcoin (ARKW) (GBTC) saw a sharp correction before the long holiday weekend. It had a five-day slump before correcting upward on December 23 when it touched its lowest mark of $11,159 per ounce. The downward swing in price and the subsequent revival are depicted in the chart below.

By the end of the day on December 26, bitcoin was trading at $15,764, and its volatility was close to 105%. The trading volume was about 15,000. The price for bitcoin fell almost 27% on December 22 compared to the high of $19,187 on December 16. Then it recovered 12.5%.

Launch of futures ETF

Bitcoin has had an incredible surge of 1,650% on a YTD (year-to-date) basis. With the end of the year just around the corner, investors are adding up their YTD gains in bitcoin.

Other news gripping the cryptocurrency market is the CBOE (Chicago Board Options Exchange) filing with the SEC (Securities and Exchange Commission) to list multiple bitcoin futures ETFs. They include the First Trust Bitcoin Strategy ETF, the First Trust Inverse Bitcoin Strategy ETF, the GraniteShares Bitcoin ETF, the GraniteShares Short Bitcoin ETF, the REX Bitcoin Strategy ETF, and the REX Short Bitcoin Strategy ETF.

Comparative performance

These ETFs would track the performance of the futures traded on bitcoin rather than the asset itself. Increasingly, hedge funds are considering parking their money in cryptocurrency.

When compared to the performance of equity markets (SPX-INDEX) (QQQ) in general, cryptocurrencies (GBTC) (ARKW) have had exorbitant returns. But apparently, the risk element is much higher due to more significant volatility. The S&P 500 Index (SPX-INDEX) has risen ~3% in the past month, while bitcoin has risen ~65%.

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