Multiple ETFs are still awaiting approval from the SEC.
While news of these filings may be good for bitcoin in the short term, since the crypto market is still young, perhaps many investors will end up being “just passing through” this market.
For many people, the words U.S. stock market are intertwined with capitalism, the American dream and success. However, the most important connection in the subconscious of most investors is the safety and regulation provided by the SEC, and ensuring equal market access for all. Investors pour trillions of dollars into the markets each year, as well as retirement funds of up to $50 trillion, and one would not feel comfortable placing money in such a dangerous environment without security assurances. However, if the SEC chooses to approve a Bitcoin ETF in the near future, manipulation and lack of regulation is exactly what could happen.
Some of the multiple bitcoin ETFs currently awaiting SEC ruling are from well-known names in the financial world, including Fidelity, while others are lesser known, such as Anthony Scaramucci’s SkyBridge. regardless of who is behind them, the goal is to provide a bitcoin investment vehicle for the trillions of dollars currently unavailable to the crypto market directly.
There are crypto trusts on the market today, such as Grayscale Bitcoin Trust, that allow institutions to purchase bitcoin for their clients, but they typically trade at a high premium on the open market, making them relatively inefficient for the average investor. A Bitcoin ETF is backed 1:1 with digital assets, so even if it were to go public and trade in the future, the price premium would not be too high. It will provide a way for large amounts of new money to be invested and will drive and increase investment interest like never before in Bitcoin’s 13-year history.
While this may sound simple, approving an ETF now would do more harm than good for the cryptocurrency market in the long run.
Currently, the cryptocurrency market is completely unregulated. This means that anyone, including Elon Musk, can buy, sell, lie, and manipulate prices as they please in order to make a profit. This is part of the reason why the market is so volatile. Because of the decentralized nature of cryptocurrencies and the lack of a traceable “controller,” it is difficult for the government to figure out how to regulate this new asset class.
If the U.S. decides to enforce traditional securities laws to prevent manipulation, and investors in the rest of the world are not subject to these regulations, then manipulation tactics will not really diminish and the rest of the world will still reap the unethical benefits of bitcoin’s giant whales. The only way to truly regulate cryptocurrencies would require the cooperation of nearly all of the world’s major governments, yet this will be nearly impossible to do.
As a result, bitcoin ETFs will be subject to the investment moves of some bitcoin mega-whales. Those individuals with tens of billions of dollars could easily manipulate institutional investors and retirement funds through position adjustments. Not only would this cause huge losses for retail and institutional investors, it would also create a climate of distrust in Bitcoin and could turn some investors off. If someone puts 5% of their pension fund into bitcoin and then watches it plummet due to price manipulation, that’s enough to make any investor wary of it, or even decide to give up on it altogether.
Some might argue that anyone investing in a bitcoin ETF should be aware of the risks, and should take any losses that occur on their own. While this may seem reasonable, it completely defeats the purpose of the SEC and begs the question of why we don’t allow all forms of manipulation in the stock market, any manipulation that causes prices to fluctuate in ways that don’t represent the true value of the asset, making it incredibly difficult to make profitable investments in it, even for the most risk averse people.
As soon as the cryptocurrency market becomes more mature, the U.S. will be ready for a Bitcoin ETF. Once there is enough money in the market to dilute the giant whale holdings to the point where they can’t influence the price, or the value of the holdings increase to the point where they can no longer gamble on the risk of losing large amounts of capital, these manipulators will lose their power once conditions are ripe enough. Only then will the influx of ETFs and large amounts of institutional money into the crypto market make sense. Until then, retail investors and eager institutions can join the cryptocurrency revolution using the tools available to them, wait for the ecosystem to become more robust, withstand huge price swings, and then benefit from the early adopters.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/why-isnt-the-u-s-ready-for-a-bitcoin-etf/
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