According to SEC the reason to delay ETFs until September is that most bitcoin trading occurs outside of the United States on unregulated exchanges which are subjects to fraud and manipulation. There is a significant barrier to overcome. The VanEck and Solidx Bitcoin ETF applications try to address this issue by putting a hefty $200.000 price tag on the initial entry that scares a lot of retail investors, and they also added a layer of insurance to protect in the event if the coins are hacked or stolen. However, this is not likely to satisfy the SEC.
Dan Morehead, the CEO of Pantera Capital, one of the world largest crypto hedge funds, says investors ‘overreacting’ to bitcoin ETF delay.
I think the main thing to remember is that bitcoins are like very early-stage venture but it has a real-time price feed and that’s a unique thing and people get really excited about the price and overreact, I think to announcements. There has been a couple of big things coming out in the last week and the ETF rejection is the same story we’ve had for you know five years, I think the SEC has been very cautious with an ETF”
According to Dan Morehead, the Bitcoin is up 82% year on year and is still doing great. The perspective one should have given that Bitcoin is such an early-stage venture type security or asset, it needs to be as hedge funds first. Pantera launched the first cryptocurrencies product in the US five years ago. They looked at ETFs and different products, but they’ve picked hedge fund structure because according to Pantera CEO it’s going to be quite a long time until a Bitcoin ETF is approved.
“Here’s a perspective of the last asset class to get approved for ETF certification. Was copper, and copper has been on earth for 10,000 years and it just got approved in 2012 after a very long multi-year process. I think ETFs in Bitcoin still have quite a ways to go.”
He added that the market is focusing on the wrong news because besides the ETF being rejected for the fifth time, which for Dan Morehead it’s not an interesting news, there were also launched a new cryptocurrency exchange. The New York Stock Exchange, which also owns $42 billion of other exchanges, launched a cryptocurrency exchange called Bakkt, a huge news, according to Morehead.
“The parent company of New York Stock Exchange which also owns 42 billion dollars worth of other exchanges launched a cryptocurrency exchange called Bakkt. That is huge news! The other investors including Pantera or BCG, Microsoft. That is going to be a very profound impact over the next five or ten years for the markets. and to my mind that’s what people should be focused on.”