One of the things that make cryptocurrencies interesting is its ability to triple your investment in such a short period of time. Considering the speculative nature of the digital currencies, many are looking to invest in these cryptocurrencies. Since December, we’ve seen Bitcoin hit its all-time high at near $20,000 only to drop to around $5,000 in June. And now, Bitcoin is hovering back at $7,000.
The US Securities and Exchange Commission (SEC) is due to make a decision whether or not it is going to approve a Bitcoin ETF. In recent weeks, the SEC has rejected a number of Bitcoin ETF applications including that of Cameron and Tyler Winklevoss. Its concern is that there is a chance of price manipulation.
What Bitcoin ETF potentially offers to the table is an easier way for investors to buy Bitcoin. And also, there is a huge potential that it can bring capital coming from institutional investors. However, if you are going to ask Andreas Antonopoulos, he believes that it is a bad decision to have a Bitcoin ETF. Though he is a notable Bitcoin advocate, he mentioned that what you are actually getting is not the actual bitcoin. Instead, it is a setup wherein “the custodian holds the actual bitcoin and what you’re getting is a share in their fund—not bitcoin”.
And also, if you are going to ask the likes of Vitalik Buterin, he believes that though Bitcoin ETF boosts the price of Bitcoin, the market should be more focused on mass adoption.
A Drop in Price Variation
But even if there is still no Bitcoin ETF being approved by the SEC, there is already the participation of Wall Street firms into the picture. And in fact, what it did is make the market a bit more stable.
Cryptocurrency trading technology firm SFOX noticed a drop-off in price variation of Bitcoin. According to Danny Kim who is the head of growth for SFOX, “Before institutional firms were actively trading crypto or heavily involved (before 2018) bitcoin price differences between exchanges varied as high as 4.5%”.
Short on Bitcoin
But one thing that has changed Bitcoin trading this year is the significant number of individuals who are shorting on Bitcoin. Here, investors bet that the price of Bitcoin is going to fall. Many traders are giving up their hope that Bitcoin will maintain its current price. On September 1, there were 10,000 Bitcoin short positions.
What this could mean is that there could be a chance that Bitcoin price could be pushed higher quicker. This is called short squeezes. This happened already in the past few months. Danny Kim mentioned that despite the short positions, with institutional money present, this could ultimately mean long-term stability.
He mentioned that “Eventually, it could even come to the point where Bitcoin could come to resemble the stable coins people are looking to for payments and is used for Satoshi Nakamoto’s original vision: a ‘Peer-to-Peer Electronic Cash System’”.
Will a Bitcoin ETF make the price of Bitcoin go up? Are we even going to see a Bitcoin ETF this year? There are those who think that we will have to wait next year before we see a Bitcoin ETF.