Nick Chong · 7 days ago · 2 min read · Insights via Grayscale Investments
The current Bitcoin ETF proposal awaiting SEC has captured a significant amount of attention within the cryptocurrency ecosystem, with investors and traders eagerly anticipating a mid-August decision that could decide the fate of the 2018 crypto market.
Should the approval for a Bitcoin exchange-traded fund succeed, the cryptocurrency market could potentially experience a never-before-seen influx of capital as institutional capital, speed traders, and accredited investors move into the crypto space for the first time.
The Bitcoin ETF proposal, submitted as “Notice of Filing of Proposed Rule Change to List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin Trust” on June 26, is currently under consideration by the US Securities and Exchange Commission.
A decision from the SEC regarding the filing is likely to occur near August 16 — the submission of a filing to the SEC is followed by the publishing of a notice in the Federal Register, which occurred on July 2. The SEC typically has 45 days to make a ruling on a proposed rule change, which would leave the final date for a decision on Bitcoin ETFs as halfway through August.
As the 45-day period can be extended, or even followed by the initiation of proceedings by the SEC to seek assistance in making a decision, an August 16 date for approval or denial is not definitive. VanEck SolidX Bitcoin Trust CEO Jan van Eck commented on the proposal in an interview with Bloomberg, expressing optimism regarding SEC ruling:
“We believe that collectively, we will build something that may be better than other constructs currently making their way through the regulatory process. A properly constructed physically-backed bitcoin ETF will be designed to provide exposure to the price of Bitcoin, and insurance component will help protect shareholders against the operational risks of sourcing and holding Bitcoin.”
Bitcoin ETF Approval May See Market Volume Boost
The VanEck proposal would require the VanEck SolidX Bitcoin Trust to purchase Bitcoin in bulk to back the ETF and store them securely, which will likely occur in the OTC market as outlined in the filing, which states that the Trust aims for shares to reflect the performance of Bitcoin prices:
“The Trust intends to achieve this objective by investing substantially all of its assets in Bitcoin traded primarily in the over-the-counter (“OTC”) markets, though the Trust may also invest in Bitcoin traded on domestic and international Bitcoin exchanges, depending on liquidity and otherwise at the Trust’s discretion.”
Notably, the availability of a Bitcoin ETF within the US would make simple, streamlined Bitcoin purchases available to institutional investors, less technically adept investors, and speed traders. The impact of speed traders, who typically execute extremely high volumes of trades, could potentially have a significant impact on the price of Bitcoin — as evidenced by the presence of speed traders in the European Bitcoin ETF market.
BitMEX CEO Predicts $50,000 BTC Price Subsequent to ETF Approval
An increase in the overall demand for Bitcoin is highly likely to exert a strong positive influence on the price of Bitcoin. Co-founder and CEO of BitMEX Arthur Hayes recently predicted a massive rise in Bitcoin value should the SEC approve the proposal, stating that an ETF would bring real money to the table in an interview with CNBC’s Fast Money.
“I think that something that goes up to $20,000 in one year can have a correction down to $6,000 and will definitely find a bottom at about $3,000 and $5,000 range. We’re one positive regulatory decision away — maybe an ETF approved by the SEC — to climb through $20,000 and even to $50,000 by the end of the year.”
As with anything in life, nothing is guaranteed, but it will be interesting to see what happens to the price of Bitcoin in the second half of this year.