The demands for the approval of a bitcoin exchange-traded fund (ETF) are growing stronger. As of now, a crypto-linked ETF has not been approved by the regulatory body that is in charge of this matter, the United States Securities and Exchange Commission (SEC). The bitcoin world is still pretty nascent and a lot of negative and illegal elements have seeped into this world owing to the lack of regulations.
The demand of an ETF is led by the institutions. If an ETF gets established, it will provide an intermediate fabric for the institutional investors to step into this volatile market. As of yet, the SEC has not granted an approval due to the issues like manipulation, lack of regulation, liquidity, custody etc. The utmost priority of the regulatory body seems to be the protection of the investors.
Now, if an “all-hyped” ETF gets established, what effect it might have on the market? BlockPublisher recently got in touch with the Co-founder of Delphi Digital, Kevin Kelly, as he shared his opinions regarding the effect of a bitcoin ETF on the crypto world. He said:
Kevin: “The approval of a bitcoin-backed ETF will likely boost the price of BTC (and as a result other crypto assets) if history serves as any guide. The launch of gold-backed ETFs in the early 2000s granted a wider investor base access to the yellow metal. The increased demand for these products and the broad weakness in the US Dollar helped spur the multi-year run up in gold prices from ~2002-2011.”
If history is taken into context, one might infer that a bitcoin ETF will likely help push the bitcoin price up a bit. Further adding on to his statements, he also said:
Kevin: “One of the keys reasons bitcoin has not reacted in a similar way as gold to the recent market uncertainty is the lack of accessible, liquid investment products. Many individual investors hold gold as a portfolio hedge, but a large source of demand for the precious metal comes from institutional investors. Institutional ownership, measured by the most recent set of 13F filings for Q3 2018, of the two largest physically-backed gold ETFs (GLD, IAU) averages ~44%, according to Nasdaq. Demand for gold tends to rise during periods of heightened uncertainty in riskier asset classes (i.e. stocks) as institutions adjust their allocations to market conditions. There is not a lot of ownership overlap between gold and crypto assets currently, at least at the institutional level.”
Some critical points are raised by Kevin here. Let’s see how long does it take for an ETF to get approved in the crypto world and what effect does it bring overall.