Bitcoin exchange traded fund ETF delays dampen market momentum

 

Contents

• Exchange Traded Fund Delays for Bitcoin
  
• A Green Light

If the year 2023 passes without the approval of a Bitcoin ETF, market participants may get discouraged.

The latest news on the Bitcoin exchange-traded fund (ETF) file by Ark Invest and 21Shares came out last Friday, and it revealed that the U.S. Securities and Exchange Commission (SEC) has prolonged the processes on the spot.

According to reports, Cathie Wood's Ark Invest filed for the spot ETF with 21Shares before BlackRock did. After a delay in June, the next setback in August was entirely predictable by experts in the field.

Exchange Traded Fund Delays for Bitcoin

Due to the SEC's discretion to postpone ETF decisions for up to 240 days, the ruling on ArkInvest's proposed spot Bitcoin ETF is not anticipated until January 2024. Thus, Bitcoin exchange-traded funds are not anticipated to debut until 2023.

While the delay isn't always indicative of rejection, it does increase the market's already high level of uncertainty and dissatisfaction. Bitcoin has been a "stablecoin" for the previous several weeks, with its price remaining relatively constant at roughly $29,000. After BlackRock submitted its spot Bitcoin ETF application in April, Bitcoin's value increased to this range from April's $25,000.

Given the hesitance of the leading cryptocurrency, the value of most altcoins has been falling. Dogecoin (DOGE) is down 6% in the past 24 hours, while Polygon (MATIC) is down 7.3%; Solana (SOL), Polkadot (DOT), Bitcoin Cash (BCH), Shiba Inu (SHIB), and Avalanche (AVAX) are all down 4-5%.

But there are altcoins that go in the other direction. Two of the top 100 tokens on CoinMarketCap had price rises yesterday: XDC Network (XDC) gained 2%, and THORChain (RUNE) gained 2.4%.

According to Coinglass, the ratio of long traders to short traders is about even, suggesting that the market is indifferent.

The fact that the Bitcoin futures market is so evenly distributed shows that investors are not preparing for any sudden spikes in the cryptocurrency's value. It's probable because they don't know whether the SEC will approve a spot Bitcoin ETF or not.

---- A Green Light?

Fortunately, hope is still present to some degree. After years of applications and regulatory debates, the SEC supposedly moved closer to approving a spot ETF. For investors looking to get exposure to digital assets, the prospective approval might be a watershed moment.

In June, BlackRock, the biggest asset management business in the world, joined a growing list of aspirants by filing for approval to create a Bitcoin exchange-traded fund (ETF).

The establishment of a "surveillance-sharing agreement" between the corporation and bitcoin exchange Coinbase boosted the company's application. This arrangement may help improve market transparency and oversight, which might sway the SEC to grant permission.

Another major investing business, ARK Invest, has an ETF application pending with the SEC, demonstrating the widespread enthusiasm for launching a spot crypto ETF.

No US company has ever had a spot Bitcoin ETF proposal approved by the SEC before. Because of the complexities of Bitcoin trading and storage within an ETF fund, investors are understandably wary of increasing their exposure to the asset class.

The cryptocurrency industry is becoming increasingly optimistic that the SEC will grant the approval that has been sought for so long. It would have far-reaching effects if investors could easily gain exposure to Bitcoin's potential without having to buy and store the cryptocurrency themselves.

Given the ongoing debate over the SEC's and CFTC's respective regulatory responsibilities for digital assets, a final decision is not being rushed. The timing of the introduction of an exchange-traded fund (ETF) product to the US markets is uncertain.