Bitcoin’s price fell dramatically yesterday as the U.S. Securities and Exchange Commission (SEC) announced it would be delaying a much anticipated decision on whether it would approve a Bitcoin exchange traded fund (ETF).
ETFs are widely seen as a key next step to cryptocurrencies’ entry into the financial mainstream. Buying, selling and storing cryptocurrency pose complications for mainstream institutions which are not set up to deal with wallets, private keys and so on. ETFs track an asset’s price and are tradeable on exchanges, allowing exposure to a virtual asset like Bitcoin without the need to own it.
The SEC has consistently rejected any Bitcoin ETF due to concerns over price manipulation. The latest delay relates to a proposal by digital asset investment firm VanEck who partnered with financial services company Solid X on the application. This is VanEck’s third attempt to launch a Bitcoin ETF.
Market overreaction
However, according to Dan Morehead, the CEO of crypto hedge fund Pantera Capital, the markets have overreacted to the news. Speaking to CNBC’s Fast Money program, he said that it would likely be “quite a long time until an ETF is approved.” In fact, the last time the SEC approved a new asset class for an ETF was copper, and “copper has been on earth for 10,000 years.“
Morehead also pointed to Bitcoin’s year on year price growth of over 80% and that there had in fact been plenty of good news lately in the crypto world. Perhaps most significant is the announcement that the Intercontinental Exchange is partnering with Microsoft and Starbucks on the new Bakkt crypto platform. This news was “huge,” he said, and will have “a very profound impact over the next five or 10 years for the markets.”
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