Various analysts are warning traders that they shouldn’t expect a bitcoin exchange-traded fund (ETF) this year. Despite bitcoin doing better than ever – it’s now trading in the high $30,000 range – such a product is still likely to carry several red flags wherever it goes.
A Bitcoin ETF May Not Happen This Year
Todd Rosenbluth – head of ETF and mutual fund research at CFRA Research – explained in a recent interview that the Securities and Exchange Commission (SEC) is becoming even pickier when it comes to which products should and should not garner approval. He states:
The SEC appears to have a rather high bar to clear, tied to market manipulation and custody audit… As the infrastructure around [bitcoin] grows, we expect an ETF to come to market eventually, but it is unclear when, and we are skeptical it will be in 2021.
The idea of a bitcoin-based ETF has been floating around since 2013. Over time, the idea has become more and more fleshed out, though a final product has never come about. Many traders thought 2019 would be the time in which approval was granted considering just how close enterprises like Bitwise and Van Eck got to getting an okay on their applications, though sadly, this was not meant to be.
Still, this hasn’t stopped people from believing that a bitcoin ETF could potentially be introduced at some point, and companies like Van Eck have stated that they are going to keep on chugging along, no matter how hard the road appears to be. Jan Van Eck – the chief executive of the family firm – explained to the company’s clients in a statement:
We’re going to keep trying. The way the regulations work is you file, you have conversations with the SEC, and if it looks like you’re not going to get approved, you pull your application… In general, the SEC is concerned about market manipulation. They’re concerned about custody, and then I think they’re just concerned about the maturity of the market.
Still Some Things Getting in the Way
As it stands, there appear to be two major factors moving against bitcoin. The first is that it’s still quite young. Bitcoin first appeared in whitepaper form in the year 2008 and began getting mined in January of the following year. Thus, it has only been around for about 12 or 13 years and is still considerably new when compared to other established asset spaces such as the stock market or precious metals.
In addition, bitcoin is still widely vulnerable to price swings, with the currency recently hitting the $40,000 mark and then falling by about $4,000 to hit $36,000 at press time. While bitcoin may be doing extremely well when compared to 12 months ago, the SEC is likely to take moments like these into account when making any future decisions regarding a bitcoin or crypto-based ETF.
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