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Bitcoin ETF Decision is Testing Institutional Investor’s Patience

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The United States Securities and Exchange Commission (SEC) on Tuesday delayed its decision regarding the approval of a bitcoin exchange-traded fund (ETF) put forward by Bitwise. The proposal was first filed at the beginning of this year and in March the regulatory body had pushed its decision on Bitwise‘s and VanEck/SolidX proposals till May.

The latest delay in the decision can be seen in the hindsight of the bull-run that is being witnessed right now in the crypto world but it is not a complete buzz killer. At the time of writing, bitcoin is still floating around the highs that it gained over the past few weeks. It is fluctuating around the $8kmark and has already attracted a lot of attention from the global financial world. Although the decision by SEC has not directly influenced bitcoin’s price significantly, it remains to be seen how its ripples spread out. It is largely expressed by many experts in the crypto game that it is only a matter of time before a crypto ETF gets approved. Last year, when an ETF proposal by the Winklevoss twins was dismissed by the SEC, one of its commissioners, Hester M. Peirce, showed her dissent, stating:

“The Commission’s mission historically has been, and should continue to be, to ensure that investors have the information they need to make intelligent investment decisions and that the rules of the exchange are designed to provide transparency and prevent manipulation as market participants interact with each other. The Commission steps beyond this limited role when it focuses instead on the quality and characteristics of the markets underlying a product that an exchange seeks to list”.

READ ALSO: SEC’s Commissioner Shows Dissent on the Rejection of Bitcoin ETF Proposal

So what is the buzz around this crypto-linked ETF and how is it significant?

A crypto-linked exchange-traded fund is expected to provide the institutional investors wanting to enter the crypto game with a secondary layer to play with. Hitherto, there is a clear lack of regulation in the crypto space. Owing to this shortcoming, the number of scams, illegal activities and frauds linked to the cryptocurrencies is extremely large. This is why institutional investors do not want to directly get in touch with this ‘dirty’ space. But with a crypto-linked ETF in place, a passageway will be provided to the institutions to enter this space without getting directly involved with cryptos. As a result of this, a large amount of institutional money which has been sitting on the sidelines is expected to flow into the cryptocurrency world, taking its market capitalization to new highs. This will also bring along more stability and credibility to the volatile world of crypto. This inflow of institutional capital is also expected to take prices of various cryptos to their new heights.

READ ALSO: Did SEC & CFTC Suggest a Self-Regulated DAO for Crypto Industry?

As of now, the market capitalization of bitcoin is very small, around $140 billion, as compared to the trillion dollar market caps of big financial institutions. Big whales of the market take advantage of this small market cap by using pump-and-dump strategies to artificially manipulate bitcoin’s price. As institutions enter this space and market cap hits trillions, it is likely that whales will be rendered far less potent than they are now to manipulate price. Despite all the benefits that are supposed to come with the establishment of a crypto-linked ETF, one can ask why the SEC has not approved it yet. The answer in a simple word would be… immaturity.

It has just been over a decade since bitcoin emerged on the financial scene. Although it emerged as a new form of global currency challenging the centuries-old banking system, it’s initial use-case was largely driven by its usage in illegal marketplaces such as the dark web. Being decentralized, there is no central party overlooking the activities which make it easier for this asset to be used in illegal activities such as money laundering. Besides, the price of bitcoin has always been volatile as well.

READ ALSO: Technology Behind Bitcoin Needs to Be Understood Before CFTC and SEC Place Regulations

One day the asset is booming and the very next day it is down in the dust. The recent spike in price shows just how volatile bitcoin is in nature. Then comes the issue of custody. Millions of dollars are being moved around and the problem of custody is something that needs to be solved through official means. Since the technology is still developing and the legislative front is also incomplete, there aren’t many concrete regulatory frameworks surrounding this space. So some of the major problems that hold back the approval of a bitcoin ETF include the problems linked to liquidity, custody, arbitrage, price manipulation and risk associated with this uncertain space. The biggest challenge for the SEC is to ensure the security of its investors and to provide enough free space to cryptos to continue on with its innovation. Unless security of the investors is not ensured, it is unlikely that the SEC will approve an ETF.

Experts have varying views about a crypto-linked ETF. Here are a few of them from the past:

The ETF is a great tool for institutional clients, which allows you to use crypto-actives for trading, but does not provide those benefits that are incorporated in the cryptocurrency. The ETF won’t raise the market caps since it is a derivative and that is a separate market. – Founder and Chief Executive Officer of Aximetria

READ ALSO: Here’s Why There’ll be no Bitcoin ETF in Six Months

“Having a crypto linked ETF would bring institutional legitimacy and liquidity. Exchange traded funds need to be approved by the SEC, and so far the SEC has been hesitant due to rampant price manipulation. Approval would mean that this hurdle was addressed, encouraging institutional players like banks to create markets and get involved in the market. Larger institutional investors need increased liquidity in the crypto markets to be able to trade meaningfully. As more institutional players jump in, more retail (individuals) would likely follow suit. Overall it would be a boon for market activity in cryptocurrencies. – Anna Yen, Equity Derivatives Expert

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. – Co-founder Delphi Digital, Kevin Kelly

An ETF is seen as a positive move for the crypto world. However, it remains to be seen when it gets established.

 

source:blockpublisher

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Can Bitcoin Surge As Fast As It Did In 2017?

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In 2017, Bitcoin successfully hit $19,783, a figure which till date, is still the asset’s all-time high. The mark is still being used in comparison with the coin’s current price especially by naysayers who believe the glory days are not only over but probably will not be seen again.

However, what‘s most important is that back then, Bitcoin reached the $8,000 mark and less than a fortnight later (11 days precisely), it gained $2,000, hitting the $10,000 mark.

At the moment, Bitcoin is struggling to reach and surpass the $8,000 mark, a price it had previously surprised, several days ago. So, what’s the likelihood that we will see a similar bull run?

Current Predictions

Bitcoin was at $7,800 in November 2017. However, a little less than a month later, it had its biggest surge, hitting its all-time high in December. So, ever since the price rally began this year, analysts and experts have been trying their best to figure out the possibility of a similar bull run.

When Bitcoin started to break through earlier set resistance levels up until it reached $8,000, many analysts were sure that it was definitive proof of the end of the crypto winter that had plagued the sector since last year. This assertion was understandable considering the fact that it was about $3,150 in December last year and in about 6 months, shot up to $8,000.

The larger part of this rally happened in two months, – April and May – supporting the claim that Bitcoin usually sees massive gains in short periods.

According to Thomas Lee, co-founder of Fundstrat Global, in a tweet last month;

“Reminder that BTC generally generates all of its performance within 10D of any year. –ex the top 10 days, BTC is down 25% annually since 2013.”

Another researcher, Alex Saunders, has also stated that the $8,300 is significant because less than two weeks after Bitcoin hit that mark in 2017, it was able to reach its all-time high.

How Soon Can We Expect Another Surge?

At the moment, pretty much everyone agrees that the market will do fine. Some have expressed that pullbacks are almost inevitable but they aren’t and shouldn’t be a deterrent as the price would definitely correct itself after a few of those. However, there is no general agreement as to when exactly another surge will occur.

A cryptocurrency trader and investor has however predicted that Bitcoin would move fast. In a tweet The Rhythm Trader (@Rhythmtrader) said:

-News Source

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Report: Bitcoin (BTC) Futures Trading Approaching All-Time High in May

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According to a new report published by The Block, the month of May is on pace to set a new all-time high in Bitcoin futures trading for the CME Group.

In a note sent to clients on May 21, the Chicago-based firm and backer to one of the largest Bitcoin futures trading exchanges, claims that May is “shaping up to be the strongest month ever for CME Bitcoin Futures.” The firm also reports a record day of trading on May 13, with 33,677 contracts being traded for the equivalent of $1.3 billion in BTC. Daily volume for Bitcoin future trading has also spiked during the month of May to 14000, up from 9900 in April.

CME Group continued,
“Since launch in December 2017 we have traded over 1.6MM contracts (+8MM equivalent bitcoin) representing over $50BN in notional value ($4.2BN per month).”

Beyond daily volume for futures trading, new account creation is also on the rise for the group. CME reports that the number of accounts for Bitcoin futures trading has climbed to an all-time high 2500, which the group interprets as a booming desire for traders to hedge on the risk of BTC,

“The number of unique accounts continues to grow showing that the marketplace is increasingly using BTC futures to hedge bitcoin risk and/or access exposure.”

Despite the seemingly bullish market for Bitcoin and cryptocurrency, with the price of BTC up close to 100 percent since the start of April, traders remain divided over the future valuation for the coin. BTC Futures, such as those offered by the CME Group’s exchange, have become a popular alternative for traders looking to speculate on the market movement for Bitcoin. Futures contracts have long been one of the more dominant products for the traditional financial markets.
Users can open long or short positions on BTC futures, depending upon where they see the price of the currency moving. With Bitcoin hovering near the $8000 mark for its second day in a row, both the bears and bulls are holding their breath over the next price movement for BTC. Some analysts are now calling for the currency to fall back to $6K before making another run at the all-time high. Considering the massive gains and bullish rally Bitcoin went on since the start of April, after more than 12 months of declining price and ‘crypto winter,’ some investors are anticipating a correction.

However, others see Bitcoin entering a perfect storm of market conditions for renewed investment. Given the economic uncertainty being generated over deteriorating negotiations between President Trump and President Xi, a looming U.S.-China trade war has bullish indicators for the price of cryptocurrency.

In addition, the mounting adoption of cryptocurrency by major industry players such social media giant Facebook and investment bank JP Morgan Chase have given a vote of confidence for BTC that was not present during 2017’s bull run. While FOMO will continue to drive the price of crypto, in both directions, the growing futures market provides another avenue for would-be speculators.

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Top 5 Tips Prior to Engaging in OTC Bitcoin Trading

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When it comes to dealing with Bitcoin trading, there are numerous options one can easily explore. Whether it is through regular exchanges, OTC trading, or peer-to-peer trading, any and everyone option can be worth exploring. However, those who want to experiment with OTC Bitcoin trading need to keep some very basic tips in mind at all times. No one wants to lose money in a way that could have easily been avoided.

Contents [hide]

  • 1 Private OTC Chat Rooms are a No-no
  • 2 Never Deal With Just Individuals
  • 3 Proper OTC Desks are Easy to Find
  • 4 If it’s too Good to be True…
  • 5 Don’t Invest Money one Can’t Afford to Lose

Private OTC Chat Rooms are a No-no

On the surface, there won’t be too many people who bat an eye where private OTC Bitcoin trading groups are concerned. Similar to pump signal groups or altcoin discussion groups, OTC trading is not necessarily a business activity out in the open at all times. Over the past few years, there have been plenty of legitimate private OTC groups, albeit the number of potential scammers should never be overlooked either. Since these criminals know people simply want to buy BTC at a competitive price, they will try to obtain customer funds without handing over any BTC.

Whereas most people would automatically assume such businesses are shut down pretty quickly, the reality is often different. Since these trades involve private groups, the information is usually not shared with the rest of the world. This is primarily because users know all too well they opted for a less-than-legal option and must pay the price for trying to take a shortcut. That doesn’t mean fake private OTC Bitcoin trading groups aren’t shut down in the end, though, but it seems unlikely any stolen money will ever be recovered.

Never Deal With Just Individuals

Over the past few years, the number of people who own Bitcoin has seemingly increased. As such, one would expect the OTC market to grow by leaps and bounds. Anyone is free to buy and sell Bitcoin at their own pace, as long as they don’t try to make millions of dollars from doing so. When traders deal with very high volumes of Bitcoin and fiat, they will need to obtain a money transmitter license sooner rather than later.

This is why private individuals offering OTC Bitcoin trading services are best avoided. It is very uncommon for any of these individuals to be officially licensed. As such, these users often tend to scam others and run off with their hard-earned money. While it may seem convenient to deal with an individual rather than a proper company, the results will often be disappointing or even worse.

Proper OTC Desks are Easy to Find

As the popularity of Bitcoin continues to grow by leaps and bounds, there are more and more legitimate and registered companies who engage in OTC Bitcoin trading. Some of the well-known names include Japan’s Coincheck, Kraken, Huobi, and Itbit.  These are just three examples of how many companies users can go through for all of their Bitcoin needs. It might involve a bit more work to get everything set up accordingly, but it greatly reduces the risk of losing any money in the process.

Speaking of finding a legitimate Bitcoin OTC trading provider, there are more and more companies joining the fray. This further expands the number of options users have to legitimately obtain Bitcoin through methods which suit their needs the best. To properly engage in this type of business activity, users should always conduct their thorough research before making any decision. It takes effort to get in on the Bitcoin action, after all.

If it’s too Good to be True…

It is better to avoid such offers altogether. No one will openly reject an option to buy Bitcoin slightly below market prices, but any price difference that seems too good to be true is almost always a scam. Offers like these will become a lot more apparent when the next Bitcoin bull run commences and FOMO starts kicking in accordingly. It is very difficult to buy Bitcoin at the real market price, primarily because the value fluctuates quite a bit every single day.

Moreover, any relatively shady business which explains why a user or company is engaged in OTC Bitcoin trading will usually indicate a scam looms ahead. Similar to the point above, conducting thorough research can usually prevent users from losing their money. A somewhat dubious background story combined with a too cheap Bitcoin price is usually a major red flag. Even so, there will be people who fall for these kinds of schemes simply because greed gets the best of them.

Don’t Invest Money one Can’t Afford to Lose

The golden rule as far as overall investing is concerned is to never spend money on such markets if the funds can’t be written off when things go awry. The same principle applies to OTC Bitcoin trading, as Bitcoin’s price is very volatile. Given the current value per BTC, there is a lot of money involved when one tries to obtain a full Bitcoin. As such, do not try to chase potential profits if the money is not there to spend on extras like these in the first place.

Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency.

 

source :nulltx

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