Pro 09

Bitcoin Price Analysis: BTC Bounces But Bears Still in Control

Bitcoin price just pulled off a nice 10% bounce with the next level of resistance at $3,700. Let’s take a look at what can happen next?


Bitcoin Price: Market Overview

Bitcoin price 00 dropped to a new yearly low at $3,210 and the overall market cap now rests at $110.6 Billion. Clearly, bears are still running the show for BTC and the SEC’s  final postponement of a Bitcoin exchange-traded fund decision didn’t seem to help.

Crypto-fanatics will now need to wait until January 24th for the launch of Bakkt and February 26th for a final approval or denial of a Bitcoin ETF from the SEC. If the cryptocurrency markets’ trend reversal is dependent upon either of these events then we’ve got a long way to drop waiting on the unpredictable outcomes of each of these events.

4-HR Chart

Bitcoin 00 broke below the $3,550 and $3,400 supports and the cryptocurrency will likely mean that $3,700 will post a stiff resistance to overcome. However, at press time, BTC price has managed to break above the $3,600 mark and now looks poised to test $3,700.

The bounce from $3,210 to $3,615 was pleasant and seems to have caused shorts to cover, but bulls couldn’t muster enough follow through to maintain the move and BTC’s failure to cross above any of the overhead exponential moving averages show bears are still running the show.

This is also backed up by the extremely high number of shorts on BTC/USD and the fact that they snapped right back into place after yesterday’s bounce.

BTC Shorts

After taking a glance at the daily and weekly RSI, Stoch, and MACD there’s not much positive to say about BTC short-term future. Perhaps the silver lining of all this will be that the bears are uber-confident right now and an all-time high amount of shorts can be forced to cover (like yesterday) when Bitcoin pulls off a 10% bounce.

In the past, Bitcoin has shown a propensity for weighty 20%+ rallies. A strong upside move would force shorts to cover and provide rapid gains for those trading BTC at the current range.

Daily RSI / Stoch / MACD

Weekly RSI / Stoch / MACD

Monthly Chart

Now for a dose of reality. If bears don’t let up, BTC can drop to 3,000, $2,545, and $1,400.

Safe trading friends and please remember to always use a stop loss. More cautious traders might want to wait until Q2 and Q3 of 2019 in hopes of a trend reversal.

[Disclaimer: The views expressed in this article are not intended as investment advice. Market data is provided by Bitfinex. The charts for analysis are provided by TradingView.]

Where do you think Bitcoin will go over the short-term? Share your thoughts in the comments below!


Images courtesy of Shutterstock, Trading View. Market data sourced from Coinbase.

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Lis 26

Bitcoin ETF ‘Definitely Possible,’ SEC Commissioner Confirms

SEC commissioner, Hester Peirce, recently appeared on the ‘What Bitcoin Did’ podcast, confirming that a Bitcoin ETF was definitely possible.


‘I Dissent’

The most notably pro-bitcoin SEC commissioner, Hester Peirce, appeared on the ‘What Bitcoin Did’ podcast at the weekend. Whilst unwilling to describe a future Bitcoin ETF as inevitable, she did confirm it was definitely possible.

Peirce first won the hearts of the crypto-community with her ‘statement of dissent’, following yet another denied Winklevoss ETF application. In the statement made in July, she publicly disagreed with the Commission’s view, that Bitcoin was not “ripe enough, respectable enough, or regulated enough to be worthy of our markets.”

She felt that the SEC had gone beyond its jurisdiction, in assessing the underlying asset, rather than the specific market that it would trade in.

In the podcast she reasserts that the SEC has a specific mandate, to uphold the regulatory framework. She believes that the SEC should allow for innovation within that framework and not become interventionist.

‘Crypto’ Not A Free Pass

Peirce explains that the SEC has brought in specialists to advise in the area of cryptocurrency, who have led the agency to take to a cautious approach. She believes that it is right to pursue those who use “crypto” in an attempt to scam people out of money but is pushing to allow more scope for innovation.

Just because you are calling something Crypto does not mean you can ignore the rules we have had in place for years… but I do think we also need to be willing to open the doors a little bit wider for innovation.

She stresses that although so far all cryptocurrency ETF applications have been rejected, they are still open.

Ongoing Relationship

Peirce points out that the commissioners have been inviting comments from the public, and that this process is extremely useful. The applications are an ongoing relationship or conversation, the SEC’s orders following denial simply point out issues to address.

One the face of it, it may seem like the SEC is poking around and trying to cause issues but in reality, it might be the opposite.

Peirce explains that many comments enquire about the timing of the route to final approval, but this is not so easy to answer. Each proposal is assessed on its own merits, and each is designed differently. So when a particular proposal will convince three of the five commissioners is hard to say.

Peirce suggests it must run its course.

Meanwhile, this month Switzerland approved the first Bitcoin ETP to trade on the Six Stock Exchange. This is the main stock exchange in Switzerland and the fourth largest in Europe. So it seems the winds of change are blowing and it can only be a matter of time before they reach across the Atlantic.

Will the Bitcoin ETF be approved by the final deadline in February? Let us know below!


Images courtesy of Shutterstock

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Lis 18

Switzerland Approves First Bitcoin-Cryptocurrency ETF with Ticker $HODL

The Bitcoin ETF $HODL, offered by Amun Crypto, will begin trading on Switzerland’s Six Swiss Exchange beginning next week. The ETF’s earnings will be linked to five different cryptocurrencies.


The ETF is being offered by Amun Crypto, a U.K. based fintech company. It will begin trading on Six Swiss Exchange next week. Six is Switzerland’s chief stock exchange, as well as the fourth largest in Europe.

According to the Financial Times, the ETF “[…] has been designed to track an index based on the movements of five leading cryptocurrencies.”

Roughly half (48%) of the ETF’s assets will be invested in Bitcoin (BTC) 00. The rest will be put towards bitcoin cash, XRP (30%), ethereum, and litecoin.

New Kid On the Block

Financial Times‘ writer Matt Flood notes that the ETF has been crafted in close accordance with the standards expected from traditional exchange-traded funds. This is according Hany Rashwan, Amun’s top executive.

Rashwan describes the aims of the ETF:

The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments

The Times reports that while competitors like CoinShares and Grayscale exist, they differ in legal form, whilst only being linked to one cryptocurrency. Seeding for the ETF will be fostered by Jane Street and Flow Traders, and it will trade using the ticker $HODL.

The Financial Times highlights the ETF’s arrival amid the lowest drop in BTC price 00 in over a year. The ETF is has been particularly the source of much hype in the cryptocurrency space. An exchange-traded fund product is expected to facilitate institutional buying of bitcoin.

Switzerland seems to be perpetually fixed in the crypto news cycle whether its happenings in Crypto Valley or the present ETF. Progress seems to abound.

In October, Bitcoinist reported on Crypto AG’s recently-granted cryptocurrency asset management license. A month earlier, Bitcoinist also wrote on Switzerland’s status as a top global Bitcoin destination.

What are your thoughts on the Bitcoin ETF $HODL? Share your thoughts below!


Images and media courtesy of Shutterstock, Twitter (@boscryptocnn, @MANT121266), YouTube (ThinkCrypto).

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Lis 06

Bitcoin Indicators Suggest Buyers are Accumulating

Bitcoin (BTC) may be stagnating in its most boring range since early 2017, but this shouldn’t be taken as bad news. In fact, there is plenty of evidence to suggest that the market-leading cryptocurrency has indeed found its bottom for 2018. 


We Are All Unique

Bitcoin’s volatility and trading volume may be down (and down significantly), but unique addresses are continuing to rise — signaling that buyers are indeed present and looking to accumulate BTC at current levels.

BTC unique addresses

Forbes recently observed the same data, commenting:

This trend can be explained by the fact that investors remain optimistic about a surge in Bitcoin prices from the SEC potentially clearing the first Bitcoin ETF over coming months. The anticipation of large gains with a limited downside has helped the number of Bitcoin users increase steadily over the last five months, even as the ensuing buy-and-hold strategy followed by most investors resulted in Bitcoin pricing fluctuating very little.

Indeed, all eyes remain patiently fixated on the SEC and it’s pending decision regarding a Bitcoin ETF — which many anticipate will provide easy access for institutional investors and Wall Street traders to join the party. (However, it is easy to argue that such traders have already been playing.)

The aforementioned business magazine’s analysis claims that an approved Bitcoin ETF could push the price of the first and foremost cryptocurrency past its all-time high of approximately $20,000. A declined instrument, on the other hand, may see the price of BTC fall below $4,000.

DMI, or TMI?

Meanwhile, Bloomberg has come out with another claim that Bitcoin may be in for some gains in the near term — touting a pair of technical indicators as evidence.

Bitcoin Breakout

The media company’s chart (reproduced above) focuses on the Bitcoin’s Directional Movement Index (DMI). Notes the author:

A look at the long-term trend lines in Bitcoin’s Directional Movement Index (DMI) shows it entered a new bullish phase. In addition, the price trends broke out of their VERA band upper limit, widely considered an encouraging sign. The digital token could see a rise as it approaches year-end.

Fingers crossed.

Are you encouraged by Bitcoin’s current price action? (Or lack thereof?) What do you think will happen after the SEC delivers its ruling? Let us know your thoughts in the comments below!


Images courtesy of Shutterstock, blockchain.info, Bloomberg.

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Srp 23

SEC Rejects Applications for 9 Bitcoin ETFs

The SEC has said no to applications for nine different Bitcoin ETFs. Applications came from ProShares, Direxion, and GraniteShares.  


Nine applications to list and trade different Bitcoin ETFs were rejected by the SEC, according to three different releases dated August 22nd.

The regulatory agency (predictably) rejected five proposed ETFs from Direxion, two from Proshares, and two from GraniteShares. The SEC cited concerns over fraud and manipulation as the main reasons for the rejection.

The official deadline for the ProShares decision was August 23, while GraniteShare’s offering was slated for September 15. Many were curious to see how the SEC’s decision would play out, as any sort of positive news would certainly send Bitcoin price 00 upwards.

Many were curious to see how the SEC's decision would play out, especially since any sort of positive news would certainly send Bitcoin prices trending upwards.

A Flurry Of Rejections

In each report, the SEC listed specific reasons that led them to reject each application. But in all three releases, the agency wrote:

[T]he Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.

The SEC also noted how none of the applications convinced them that the Bitcoin futures market was of “significant size.” According to the SEC, this failure is important because the applications have “failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to bitcoin is necessary.”

However, the SEC did note:

Its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.

The latest round of rejections by the SEC is nothing new to cryptocurrency enthusiasts who are excited about the idea of a Bitcoin ETF.

Echoes of Previous Rejections

The latest round of rejections by the SEC is nothing new to cryptocurrency enthusiasts who are excited about the idea of a Bitcoin ETF.

Last year, the agency rejected an ETF proposal from Cameron and Tyler Winklevoss, known as the Winklevoss Bitcoin Trust. In July, the SEC rejected a rule change proposal the two brothers submitted after the initial rejection.

The agency said they denied the proposal due to concerns about investor protection. At the time, the regulatory body pointed out how Bitcoin was subject to fraud and manipulation carried out from offshore markets that were unregulated.

Now, all eyes are set to wait for the SEC’s decision about the CBOE Bitcoin ETF proposal. Some legal experts think the SEC will probably hold off until 2019 on making a decision about their proposal. In the meantime, CBOE has been fairly active in working with the SEC to mitigate concerns.

What do you think about the SEC’s latest rejections? Will the commission eventually approve a crypto ETF? Let us know in the comments!


Images courtesy of Bitcoinist archives, Shutterstock

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Čvc 31

Vitalik Buterin: ‘There’s Too Much Emphasis on Bitcoin ETF’

Vitalik Buterin, co-founder of the world’s second largest cryptocurrency by means of market capitalization, Ethereum, noted that the community is placing too much attention towards Bitcoin ETFs. Instead, he reiterated on the importance of creating ways of facilitating smaller, retail investments into the market.


Following the recent Bitcoin ETF saga, the co-founder of Ethereum outlined that the public is placing too much emphasis on cryptocurrency exchange-traded-funds (ETFs), when, instead, the focus should be on making means for smaller investments.

Why Not Both?

Buterin makes the case that Bitcoin ETFs are better for “pumping price,” while offering tools for small-time investments in the cryptocurrency market would streamline quicker actual adoption.

However, it’s also worth noting that by drawing a line of the kind, Buterin is also tapping into the two use cases of the world’s first and foremost cryptocurrency. As some users have pointed out, both BTC and ETH can function as investments and mediums of exchange. As such, a potential ETF would play an important role reinforcing the former, while the means for small-time cryptocurrency purchases would facilitate the latter.

Needless to say, Buterin’s tweet has received a fair amount of attention. The overwhelming majority of people, though, are seemingly sharing the belief that both are equally necessary for the success of the industry, in general.

The Race for Bitcoin ETFs Heats Up

ETFs: a Hot Topic

Bitcoin ETFs have become a widely discussed topic in the past few days. CBOE Global Markets filed an application for a VanEck/SolidX commodity-backed Bitcoin ETF on June 2. As Bitcoinist reported, it has fairly high chances of getting approved. Unfortunately, according to legal expert Jake Chervinsky, the SEC is likely to take its time and come up with a formal decision in early March 2019.

In the meantime, a Winklevoss-proposed rule change was met with swift disapproval from the SEC. The Commission refused to allow the listing of the Winklevoss Bitcoin Trust on the Bats BZX Exchange.

Bitcoin (BTC) 00 has also been quite dynamic. Over the past week, the world’s first and foremost cryptocurrency rallied to a two-month high upwards of $8,300. Following the announcement of the SEC regarding the disapproval of the Winklevoss-backed Bitcoin ETF, the price took a substantial dive, losing over $400 in a matter of minutes. The price has since recovered.

What do you think of Buterin’s opinion on Bitcoin ETFs? Don’t hesitate to let us know in the comments below!


Images courtesy of the Bitcoinist Archives.

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Čvc 20

New Zealand Bank Shares Belief in Blockchain

SBS Bank in New Zealand seems to be considering using blockchain technology as a way to provide an improved user experience for their clients.


While some financial institutions are vehemently denying their customers’ interest in cryptocurrencies, New Zealand’s SBS Bank is taking a more pro-active approach.

According to The Southland Times, virtual currencies and blockchain technology were two of the topics discussed at the bank’s recent annual meeting. While the former still has the power to elicit skepticism, the latter is definitely a keen point of interest. The bank’s group chief executive, Shaun Drylie, explained:

We think, and the common consensus is, that it has real merit. Cryptocurrencies, we’re not too sure, and if you look at the volatility of cryptocurrencies that would suggest the market is not too sure as well.

However, this does not mean that there won’t be a possible place for cryptocurrencies in the bank’s future. Drylie added:

We’re keeping a close eye on it, but it’s very hard to pick where it’s going to go long term.

SBS chief executive, Shaun Drylie

Banking for All

Exploring the uses of blockchain technology is part of the institution’s plan to make banking more efficient for its existing clientele and more inclusive for its potential customers. They hope to provide a comprehensive banking experience to those clients who have limited access to their physical branches.

Financial inclusivity is a popular term when discussing the benefits of blockchain. This could be in the form of allowing the unbanked population, or those with restricted access to economic assistance, to easily get credit or apply for a loan.

All of the applicant’s information could be stored and easily accessed via the distributed ledger, making the reams of paper seemingly synonymous with loan applications a thing of the past. With SBS seeing an 11 percent increase in loan approvals, this could be where blockchain could make a difference.

No Stranger to Blockchain

This is not the first bank in the country that has turned to blockchain technology. The Australia and New Zealand Banking Group (ANZ) and IBM have previously collaborated to create a more systematic and efficient solution to insurance reconciliation processes. The financial institution also used blockchain to digitize their previously paper-based bank guarantee process.

However, interest may soon turn more to virtual currencies with the possible introduction of Bitcoin ETFs. Major player Cboe Global Markets has filed an application with The US Securities and Exchange Commission (SEC) for approval thereof. Bitcoin futures trading, which began late last year, has also seen growth since it launched.

Do you think that more banks will turn to blockchain technology to replace their paper-based systems? Let us know in the comments below!


Images courtesy of John Hawkins/Stuff, AdobeStock

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Čvc 10

Price Cycles of Past & Future

Ran into this article over the weekend. The piece was extremely well written and resembles a lot of the stuff being published today. Though in retrospect, I think the question posed in the headline has been answered with a resounding affirmative.

Can Bitcoin recover?

For more insight into Bitcoin’s price action over the last few years,  here is an article I’ve published in the Global Banking & Finance Review.

And if you want to understand more about the future of cryptocurrency transactions in the real world, please also check out this article from our UK Managing Director in The Telegraph.

Enjoy!

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Football is driving the Pound
  • Is a Recession Coming?
  • New Crypto Products

Please note: All data, figures & graphs are valid as of July 9th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

As England advances in the World Cup, it seems the country has taken a step back on Brexit. Prime Minister Theresa May’s plan hasn’t been received as well as she would’ve liked. Her Foreign Secretary even likened the plan to a “polished turd,” but it seems he is now behind it.

Unfortunately for May, some critical players did not get behind it, namely the Brexit Secretary David Davis and two of his associates. With just 8 months until the March 2019 deadline, it’s looking like there will be difficult times ahead.

The Pound Sterling is seemingly unphased by all of this. Not only did it open the week with a notable gap up (purple circle), but it has continued to climb throughout the morning.

eToro - GBPUSD price chart

In fact, the British Pound has been one of the best performing currencies so far this month as the US Dollar is seeing a bit of a pullback.

USD chart - eToro

It will be interesting to see the Pound’s reaction to the game on Wednesday night. So far, the games have certainly had an impact on the mood in London, which seems to be having a bigger impact on the markets than Brexit.

The blue circle on the GBPUSD chart above is the game between England and Colombia, the victory of which secured their position in the quarter-finals. The game against Sweden happened when the markets were closed for the weekend, which might explain the weekend gap mentioned above (purple circle).

US Signs of Recession

Watching the stock markets these last few months has been like watching a game of tennis, only instead of side to side, it’s been more like up and down. Ever since the big drop at the beginning of February, the Dow Jones has been rather random with cycles of about 1000 points in either direction but going nowhere fast.

eToro - DJ30 price chart

Markets are moving upwards today, especially in Asia as the China50 scored 3.46% this morning.

Meanwhile in the United States, one of the oldest indicators of economic instability is inching closer to a bad omen.

As we discussed in an update from June 27th, the spread between the yields of the 2-year and the 10-year treasury bonds has been getting very narrow. At the time, it was as low as 34.24 basis points.

Today, that number has fallen below 30 basis points for the first time since 2007.

eToro - US 2 to 10 year treasury yield curve

If the number goes negative, that is a clear sign that investors are more worried about what might happen in the short-term than they are about the long-term market stability.

Now for Crypto

The crypto markets have been pretty calm over the weekend with prices showing excellent signs of stability over the last few weeks. The next hurdle for bitcoin is a psychological resistance at $7000.

eToro - Bitcoin price chart

Also in crypto news today…

eToro - Bitcoin ETF

No doubt, if the CBOE gets approval for a bitcoin-based ETF it will be yet another way for Wall Street traders to gain liquidity on the world’s favorite digital asset.

However, the volumes on the crypto-products already offered by CBOE and CME are still quite low. Having an additional product won’t necessarily open the floodgates, but what it will do is improve the situation during the next price surge.

Let’s have an amazing week ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. 

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,

Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: http://etoro.tw/Mati
Twitter: https://twitter.com/matigreenspan
LinkedIn: https://www.linkedin.com/in/matisyahu/
Telegram: https://t.me/MatiGreenspan


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Čvc 06

European ETF Trading Behemoth Begins Trading Bitcoin and Ethereum ETN

Flow Traders NV, Europe’s largest exchange-traded funds (ETF) trader has begun buying and selling Bitcoin and Ethereum exchange-traded notes (ETN). The company becomes the first to reveal its participation in any cryptocurrency ETN. The big question now is, when will a Bitcoin ETF become a reality?


Buying and Selling Bitcoin and Ethereum ETNs

An ETN isn’t all that different from an ETF. The principal difference between the two is that ETFs are investments in funds that track the price movement of an asset whereas ETNs are more like investing in bonds.

Flow Traders is trading in the Bitcoin and Ethereum ETNs launched by XBT Provider in 2015 and 2017, respectively. XBT is listed in Sweden with an asset management portfolio north of $1 billion.

This news of a cryptocurrency ETN listed on a regulated exchange is perhaps the most significant virtual currency news since the emergence of Bitcoin futures trading in December 2017. For one thing, it is yet another investment vehicle that is right up the alley of institutional investors.

Many analysts and commentators have identified the entry of institutional money into the cryptocurrency space as the next milestone in the growth of the industry. Investment products like futures, ETNs, and ETFs provide a much more viable option for these investors than the usual cryptocurrency trading market.

Commenting on the development, Dennis Dijkstra, the co-CEO of Flow Traders NV said:

People underestimate crypto. […] It’s big, and it is to be regulated very soon. The market participants are much more professional than people think. Institutional investors are interested – we know they are because we get requests.

Image result for Dennis Dijkstra

How the ETN Works

As a high-frequency trader (HFT), the company plans to hedge each trade as quickly as possible regardless of the direction of the Bitcoin and Ethereum price movements. To do this, Flow Traders is hedging its ETN with CME and CBOE futures contracts. All of these, in theory, should lower slippage while increasing liquidity.

According to Dijkstra, the approach holds immense benefits for the company. He did not provide any details concerning whether the Flow Traders will utilize Bitcoin or Ethereum to hedge each trade, however.

The Quest for Bitcoin ETF

With an ETN already a reality, perhaps a Bitcoin ETF might be a possibility in the not so distant future. So far, the United States SEC has remained unwilling to approve any of the Bitcoin ETF proposals it has received.

The narrative was that the emergence of futures trading would herald the dawn of Bitcoin. However, half a year has come and gone since then and still no favorable decision from the SEC has been forthcoming. In June 2018, two prominent firms; VanEck and SolidX decided to collaborate with the hope of standing a better chance to obtain the much sought-after SEC approval for cryptocurrency ETF.

Will the trading of Bitcoin and Ethereum ETNs help pave the way for a Bitcoin ETF? Let us know what you think in the comments below.


Images courtesy of Flow Traders, Shutterstock

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Čvc 02

Did the SEC Just Make it Easier to Launch a Blockchain Based ETF in the US?

The US Securities and Exchange Commission (SEC) this week approved plans for public comment which would make it easier for investment companies to bring new exchange-traded funds (ETFs) to market. Could these new rules enable the creation of more blockchain-based ETFs?


The SEC’s proposed changes would remove the need for many ETFs to seek special permission from the SEC and is targeted towards what the industry describes as “plain vanilla” ETFs. The proposal met with unanimous approval from SEC commissioners.

New Rule Will Apply to Most ETFs

SEC Chairman Jay Clayton says the new rule would “level the playing field” and that:

The proposed rule would cover most ETFs operating today and all similar ETFs that sponsors may seek to launch in the future.

Clayton did qualify his statement by explaining the new rule wouldn’t cover all products, some would require greater scrutiny. Complex leveraged products sometimes called “exotic” ETFs, for example, would not be eligible for the new process the rule would create.

In theory, the change could open up the market for investment firms offering blockchain-based ETFs. That is, ETFs which – instead of investing in cryptocurrencies themselves – invest in companies developing, or based on, blockchain technology. Blockchain-based ETFs can be viewed by traditional investors as a less risky way to capitalize on the new blockchain economy.

In practice, there has been no clarification as to whether blockchain-based ETFs would require “greater scrutiny.” They might not if they meet the industry definition of “plain vanilla,” simply based for example, on share options or bonds with no “exotic” features like extra rules for meeting a certain price point before becoming active.

New Rule Will Apply to Most ETFs

Impact on Bitcoin-based ETFs

Though the SEC has yet to specifically mention blockchain or bitcoin-based ETFs in reference to these discussions it is almost certain that bitcoin-based ETFs, which invest directly in cryptocurrencies themselves, are unlikely to see any favor from the proposed new rules.

The SEC is currently reviewing applications for a number of bitcoin-based ETFs and is holding back on the approval due to unanswered questions pertaining to the cryptocurrency markets and the way coins are valued and regulated. According to reports, the SEC has rejected over a dozen applications already.

Dalia Blass, SEC Director of Investment Management, penned a letter in March 2018, outlining the SEC’s concerns regarding bitcoin-based ETFs.

The approval of a bitcoin-based ETF would be significant, with some experts predicting this might now happen sooner rather than later.

Indeed, the SEC is seeking public feedback on an application by CBOE Global to list an ETF with bitcoin shares backed by VanEck and SolidX in documents published on the SEC website on June 26th, 2018. The move by the SEC could well signify a change in its attitude towards ETFs that invest in cryptocurrencies.

If the new rules proposed by the SEC are implemented it will be interesting to see whether blockchain-based ETFs are treated in the same way as ETFs investing in more traditional companies and technologies. If the SEC is actually targeting “plain vanilla” ETF structures with the more relaxed approach this could be the case.

The SEC could also decide that blockchain-based ETFs require “greater scrutiny,” however, the loosening of the regulatory pressure on the $3.6 trillion USD market for ETFs still marks progress which could eventually see both blockchain-based and bitcoin-based ETFs as common features of institutional markets.

Todd Rosenbluth, director of ETF & mutual fund research at CFRA Research, told Reuters the proposed rule change could:

Support new ETF launches, particularly tied to long-term thematic approaches, from small independent asset managers.

The SEC has approved seven blockchain-based ETFs in 2018 to date and Canada approved its first blockchain-based ETF in February 2018.

Do you think the proposed changes will enable the creation of more blockchain-based ETFs? Will it open the door for Bitcoin-based ETFs? Let us know in the comments below.


Images courtesy of Shutterstock

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