Bitcoin misses out on ‘$50k’ price spike with ETF uncertainty

Bitcoin misses out on ‘$50k’ price spike with ETF uncertainty
26 Jul

With bitcoin recovering from it’s recent low point of $5785 to a high this week of $8,430, crypto traders around the world were optimistic for a positive outcome over the approval of a much-hyped ETF that would mark the biggest step yet for digital assets moving into the centre-ground of mainstream finance.

A bitcoin ETF (exchange traded fund) would allow people to buy into bitcoin without having to deal with online exchanges that suffer from credibility issues and lack of regulation.

In short, unlike a currency stored in an online wallet, an ETF is an investment fund which holds stocks, bonds, commodities or any basket of assets and traded on stock exchanges.

If an ETF was approved by the SEC, the successful applicant – for example the CBOE – would need to hold cryptocurrencies as collateral and also offer greater levels of transparency with investors’ holding protected against hacking and theft.

Matthew Newton, market analyst at eToro, explains: “Custody has emerged as one of the central themes in the conversation around cryptocurrencies this year. Together with regulatory oversight, it could underpin the next big move in the market.”

He adds that the CBOE would need to back the ETF with real bitcoin but they might not store the bitcoin themselves, they could use a trusted party – potentially “an incumbent financial institution making its first steps in the crypto market”, or a more established cryptocurrency company.

In short, bitcoin ETFs would just help the entire cryptocurrency world to grow up, and stride more confidently towards the centre-ground of mainstream finance.

In February this year JPMorgan broke the negativity cycle to cite the potential of a bitcoin-based ETF, describing it as the “holy grail for owners and investors.”

However, yesterday’s statement from the SEC said: “The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change.”

Shoaib Abedi, Director at ICM Capital told that the SEC has only “delayed” the decision on whether to approve five bitcoin-related ETFs by Direxion Investments till 21st September and is still welcoming public comments regarding the matter of approving Bitcoin ETFs.

He said: “The majority of the comments show that people are happy and excited about the ETFs, why? Because a lot of people believe that it will be a good investment opportunity and will eliminate the security risk of holding cryptocurrencies.

“Moreover, people who already own Bitcoin or another cryptocurrency at higher price levels wish that the ETF could boost prices and repeat the CBOE Future contract scenario.”

So how high could the price of BTC go if the SEC changes its tune on 21st September? Mr Abedi says that gold offers a potentially equivalent scenario.

He said: “Analysts are comparing the era where gold ETFs were introduced to the bitcoin ETFs and assume that the bitcoin price could surpass $50,000.

“If the ETFs were able to attract institutional money, it can be expected that bitcoin will re-test its all-time high.”

Nicolas Gilot, Co-CEO of Ultra told that despite the negativity from the likes of Warren Buffett and Jamie Dimon, “we’ve seen the majority of bankers welcome cryptos.”

He said: ”I think this shows that institutions such as BlackRock and big banks are getting ready for soft regulation, and it’s likely that ETFs for bitcoin or futures for ETH will become a reality soon.

“Whether they believe in it or not, they will most likely be willing to trade it. And ultimately, that’s positive for the crypto space, because with volume comes legitimacy.”



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