In a recent video on CNBC, Bitwise’s Head of Research, Matt Hougan, went on the air to discuss the upcoming Bitcoin ETF verdict that will be released by Monday the 14th of October. Let’s break down the video and discuss what this could mean for the market.
Nothing should be considered investment or financial advice. Enjoy the ride.
Bitcoin ETF Could Be Approved
Matt goes right into some of the reasons why this is the time the ETF might be approved due to multiple changes in the market. Specifically, 6 of the 10 largest crypto exchanges are now regulated by the NYSE and other governing bodies, the CME futures market is surging in average volume of around $200 million per day, and there is an increase in custodial services.
These custodial services included some of the largest names in the game like Fidelity and Coinbase, the San Francisco based exchange. With the increase in adoption, liquidity, and security, the SEC is running out of reasons to postpone the ETF approval, but that has never stopped them before.
SEC is Against the ETF
Although the stars seem to be aligning, the likelihood of an ETF passing still seems unlikely in my opinion. The SEC has required Bitwise and other applicants to fill out a 1000 question document, and they plan to go through every single question for errors, loop holes, and reasons to not pass the ETF.
Coupled with this, the SEC still seems to lack a strong basic understanding of not only cryptocurrency, but the market structure and technology at its core. Let’s remember the SEC has their own agenda and can simply not pass the ETF if they feel the market is still “unregulated”.
With unfounded excuses and determinations based on whims and bias, investors should continue to expect lack luster news from the SEC. The clearest indication of the SECs position will come a day or so before the actual news breaks where the market will inevitably dump 5%-10% before the SEC ever releases any news.
This is because the SEC is just as guilty of insider trading as any other unregulated body. How else would every single announcement be pre-lead by an overwhelming market dump before the news breaks to the public?
Crypto Does Not Need Derivatives Yet
Although it would be great for the world to welcome crypto with open arms, the market still has a long way to go. Not just the market, but the technology does as well. Ethereum has yet to fix it’s scaling issues, and Bitcoin still needs to solidify a reliable second layer solution before it hits the real markets.
Along with these points, there are multiple top market assets that have yet to fully launch their main net or become what their whitepapers intended for them to become. On a realistic timeline, the market and technology at a minimum needs another 1 to 2 years before we are ready for global adoption. Although, more derivatives options will only increase the venue for investors and institutions to enter the market long-term.