By Yasin Ebrahim
Investing.com – Bitcoin looks set to close out the week near record highs Friday, on signs investors continue to back the cryptocurrency for the long haul ahead of a potential boost from a U.S. ETF that will "almost definitely" be launched this year, experts say.
BTC/USD rose 1.06% to $58,829.8, and remained just shy of its record high of $61,795.8.
"[T]he new US administration’s more crypto-friendly leadership will almost definitely spur the launch of an approved BTC ETF in 2021," Alexander Blum, managing director of Two Prime, a digital asset investment fund, said in an email, referring to incoming SEC chairman Gary Gensler.
"This can be seen by the increase in viable applications and the rampant hiring for ETF job roles at Grayscale this very moment. These groups are not making these investments blindly," Blum added.
The optimism over a U.S. bitcoin ETF launch comes amid ongoing signs of long-term demand for the popular cryptocurrency.
Rising outflows from bitcoin exchanges – a bullish on-chain indicator –showed that an increasing number of investors are moving their coins off exchanges to private wallets to hold bitcoin for the long haul.
The outflows continued to increase near levels last seen when BTC made its prior peak above $61,000, according to data from Cryptoquant.
"The ongoing reduction in on-exchange bitcoin available, coupled with rampant fiat currency debasement and institutional buying will all continue to provide macro-economic dynamics for the continued growth and utility of Bitcoin," Blum said.
But not everyone is bullish on bitcoin.
Bank of America (NYSE:BAC) made headlines this week, arguing that bitcoin's volatility makes it a poor destination as a store of value.
"Bitcoin has also become correlated to risk assets, it is not tied to inflation, and remains exceptionally volatile, making it impractical as a store of wealth or payments mechanism,” Bank of America analyst Francisco Blanch wrote in a note.
But the swings in bitcoin are not as pronounced as they once were and will continue to decline as new ways for institutional investors to access the popular crypto emerge, drawing in an influx of liquidity.
"The lack of a derivatives market has led to greater volatility. As crypto derivatives volume grows at astonishing rates (1,800% in 2020), this will change," Blum said.