First Bitcoin ETF – exchange-traded fund – is set to be approved by 2019 February. However, looking at the present case of bitcoin and the crashing prices some experts believe that this might not be a wise time for something like this.
They say that a decision as such of an ETF might increase the instability and volatility of the market even more than the current situation.
The Impact of ETF on the Market
Ever since the announcement about the ETF, there are divided analysts with their colliding views on SEC (US Securities and Exchange Commission), and Bitcoin ETF. Furthermore, they provide concerns arising from the impact that this ruling can have on the economic market.
A contributor of CNBC analyst Brian Kelly explains the major reason behind the fall of the bitcoin to $7000-$8000 as of August is majorly due to the increasing excitement about the exchange funds. During the current week, Bitcoin dropped against the US dollar.
According to Kelly, it is the result of SEC rejecting Winklevoss Bitcoin ETF appeal. It emphasized the market and the impact was the investors were quick to reach conclusions. The fall of bitcoin in this particular event fluctuates according to public opinion to it.
Andreas Antonopoulos, a reputed cryptocurrency researcher, and security expert, also shared his views on the same in a recent Q and A session with a leading portal. He pointedly explained that he does not approve the introduction of ETF in the market.
The reason for this, Antonopoulos explain that there are pros and cons to the introduction of trade funds in the market. On the one hand, this can surely be beneficial as it allows Bitcoin with space that it needs to market with professional and retail traders. It helps them with the ability to trade major Cryptocurrencies without the intervention of regulations.
However what is not beneficial is that these ETF’s can also provide a rather large platform for major investors so that they can manipulate the bitcoin prices. He further justifies this statement by saying that it is normal that almost everyone is very eager about ETF.
It is true that with the availability of ETF the prices of Cryptocurrencies can increase strikingly as more investors are trying to make use of the available commodity. As a result, there is a parallel increase in the demand and price curve.
On the flip side, it is always a worry and complaint that the commodity markets are manipulated and drives their choices. And opening these ETF’s increases the power of institutional investors to be able to manipulate the commodity prices.
It is also not ruled out as a possibility that Chicago Board Options Exchange ETF’s shall help in leading to billion dollars in the new Bitcoin market capital. But the price of BTC has chances to sway heavily on either side, up and down, of the charts during the operating hours of the US stock market as soon as the ETF launches.
But in ETF markets the investors don’t have the power to manipulate the BTC prices, unlike futures contract. Even though they lack incentive and motivation to bring down Bitcoin, there certainly is a lot a group of investors can try. For instance, the investors could utilize the ETF fluctuate the BTC prices and decide the gains it has for the market.
It, when practiced, can certainly make the Bitcoin market even more volatile and significantly unstable than it already is. In the long run, it will become difficult for manipulation of crypto prices with improved Bitcoin and regulated financial institutions.
Looking at the period from the current stage that is already under pressure, instability, and volatility, something like ETF launch can cause enough reasons for reversing market trends through the hands of large investors.