The Bitcoin market today is getting more stable than before. Could it help the three United States companies presently seeking to run Bitcoin Exchange and Traded Funds (ETF) get approved?
The Winklevoss Bitcoin ETF will see a final decision from the Securities and Exchange Commission by March 11 while SolidX expects its decision on March 17. A firm run by technology entrepreneur Barry Silbert recently filed with the Securities and Exchange Commission to list its Bitcoin Investment Trust on the New York Stock Exchange.
Though there has been a growing view that the listing of a Bitcoin ETF would have “a profoundly positive effect on Bitcoin price” the chances of any one of them being approved is dicey.
There are several good sides to having an ETF. It would create an ease of use to the Bitcoin ecosystem by enabling instant transfer between fiat and Bitcoin through a system that is generally known to many thus improving the level of acceptance. It could be seen as a form of legitimacy for Bitcoin and probably draw those who are already into stocks into the digital currency.
Fear, uncertainty and doubt
The fear of losing their coins, in the event of a hack or other technical mishap, could also be making the idea of an ETF attractive to some since there would be some form of assurance of safety unlike with exchanges.
According to analyst Needham & Company, any expected positive effect of an ETF will not only come because of the resulting asset inflow but also for the “concurrent shifts in perception and regulatory risk.” It also projects in its Bitcoin ETF in 2017. A Look at Potential Impact and Probability that a Bitcoin ETF could bring as much as $300 mln in assets in the first week alone.
However, on the probability of a Bitcoin ETF being approved in 2017, Needham & Company’s report states that it is very low giving it a sub-25 percent chance of approval. It cites the “confluence of fear, uncertainty and doubt coupled with basic incentives at the SEC” as factors that could work against the Winklevoss Bitcoin ETF approval, for instance.
Fake volume claims
These elements have been noticed in the market prior to the onsite inspection conducted by China’s top bank on major Bitcoin exchanges in the country accounting for over 90 percent of global trading transactions. Fake volume claims were also unraveled.
Though they may constitute a concern to the SEC which is saddled with preventing investment options that may create some form of instability in the financial sector, things have changed after the PBoC’s monitoring started. The price of Bitcoin has been relatively stable in the past weeks and the level of volume trade in China has dropped drastically to what seems to be a realistic point. To an extent, the Chinese players have been stripped of their monopoly on Bitcoin trading in many years.
Data from Bitcoinity show that transactions in the US dollar have risen beyond the 50 percent average of the market, while those in yuan have dropped below - a massive low from its usual over 90 percent grip. It is not immediately clear yet to what extent the Chinese New Year celebration is going to contribute to this development.
If this is sustained in addition to other considerations there is a likelihood that this point could play a role in SEC’s decision as the ETFs look forward to launching into a large segment of the public that trusts more in such a system that is relatively close to a Wall Street-style.