It’s a sign of the times that discussions about the state of Bitcoin and the crypto market more broadly are deemed incomplete without mention of exchange-traded funds (ETFs). Whilst the purists might argue that any such instrument represents a dilution of the Satoshi vision as outlined in the original Bitcoin white paper, it’s hard to argue that an ETF wouldn’t be a positive force for growth in the sector. But the latest from the rumor-mill suggests that another round of ETF decisions due this Thursday will likely result in another denial from the SEC.
Two independent sources from the Chicago Board Options Exchange (CBOE) say that the latest ETFs to be considered – ProShares’ Bitcoin ETF and Short Bitcoin ETF – are almost certain to be refused on the 23rd. The principal reasons cited for the likely denial are the use of leverage and margin in the instruments. The initial Proshares proposals were received by the SEC late last year and are based on Bitcoin futures, as opposed to funds physically holding the asset. One source explained that the nature of these ETFs means the products would be “twice removed from the organic, market-driven price of Bitcoin”, and that as such the proposals are “a little bit of fantasy” or even “DOA.”
Traders will be monitoring the situation closely as memories of the crypto market implosion of just two weeks ago are still fresh in people’s minds. The SEC’s announcement of a delay in their decision about the VanEck and SolidX ETF wiped $35 billion off the books in just 24 hours. The markets then bled out another $30 billion over the following week, with ETH and the altcoins the main losers. It’s unclear whether ETF-related sentiment is now factored into prices or whether another refusal could crash the markets yet again. Certainly speculative investors seem to feel the latter is the case, as BTCUSD shorts reach levels near their all-time high, all the while as Bitcoin continues to sit below $7000. Markets are green today, but the next 48 hours may be a different story.
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