The Truth Behind Bitcoin ETF Approval

The Truth Behind Bitcoin ETF Approval

By xuanling11 | Crypto Learning | 25 Oct 2021


Is the SEC approval of Bitcoin ETF successful in the crypto journey? The U.S. Securities and Exchange Commission recently approved the Bitcoin future’s ETF rather than a spot price ETF. The market is cheering about such approval and the price is surging since last week. Why did the SEC suddenly change its mind?

 

Future ETF vs. Spot ETF

The SEC chose Bitcoin’s future ETF rather than the spot ETF. Future ETF is a contract exchange under Chicago Mercantile Exchange (CME) as a commodity and the price is to predict how confident the future of such commodity. It goes up when investors are confident of the future while goes down when investors believed the commodity will become worthless. While spot price is the actual price of the Bitcoin itself. The idea of spot price is to help investors to invest in a regulated and financially feasible product without actually owning it.

 

Bitcoin regulations

The SEC approval did not mean Bitcoin is legitimate and the government did not approve Bitcoin as a viable investment. There are no final regulations to make Bitcoin a financially feasible product if one actually owns Bitcoin. What the SEC approval is to tell investors their price can be speculated but the actual value is unknown. They allow investors to speculate the price but it does not mean Bitcoin price is what it shows as it is.

 

The SEC approval has many aspects 

Bitcoin is still speculative

Even the SEC approves the ETF, the future ETF is not related to Bitcoin itself but its derivatives. It means the Bitcoin valuation is still pending to discuss and the government did not officially agree on the valuation of Bitcoin or even the existence of Bitcoin.

 

Bitcoin’s future ETF is a barrier

Bitcoin’s future ETF creates a barrier between the Wall Street investors and the recent rise of retail investors. While retail investors are freely pumping and dumping assets through platforms like Reddit and influencing the market or even owning actual speculated assets, the Wall Street investors controlled the future of such assets by pouring unlimited funding resources. The Wall Street investors can work on future contracts to influence the spot price of Bitcoin so that Bitcoin price can be under control by the Wall Street investors.

 

Trading cartel

Bitcoin’s future ETF helps to form a cartel such as a banking system or oil suppliers to control the price directly or indirectly. Unfortunately, the government is a part of the cartel to layout regulations to help the group gain direct access and manipulate the market. Also, future ETF costs is higher than the spot ETF price which makes retail investors harder to join the investment vehicle.

 

Can Bitcoin price be manipulated

Yes. it surely can be manipulated. The Bitcoin-only is designed to prevent manipulation from the blockchain aspect which 51% can be avoided by spending more energy rather than receiving more profits. It does not prevent the Bitcoin market to be manipulated as institutional investors can trade and sell Bitcoin in high frequency with large amounts of money without letting the market realize it until later. 

 

What is Bitcoin’s future

I think Bitcoin adoption is a great way to start crypto, but it is not the end of the game. Satoshi created Bitcoin to provide insurance of the government irresponsible to inflate the economy through increases money supplies. The next challenge of Bitcoin is to become fair and prevent market manipulation. 

 

In conclusion

Do not be too optimistic about Bitcoin’s future ETF as the government is forming a way to push retail investors’ influence away while trying to control Bitcoin’s future price. The biggest challenge Bitcoin faces is to avoid market manipulation. 


Photo by Jacob Vizek on Unsplash

Note: the post was shared on multiple platforms.

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