Grayscale CEO Ready To File Lawsuit Against SEC for Bitcoin Spot ETF

Key Insights:

  • Grayscale CEO Michael Sonnenshein stated they’re open to all options to get a spot Bitcoin ETF.
  • He said that the SEC is not doing everything it can for the investors currently.
  • GBTC continues to trade at a heavy discount of 26.22%.

As the broader market hit recovery in the last 24 hours, a lot of attention went back to crypto. But the more significant issue, as highlighted by Grayscale’s CEO Michael Sonnenshein is the lack of clearer investment methods for crypto.

And for the same, he believes the approval of a spot Bitcoin ETF is necessary.

Grayscale Wants Spot Bitcoin ETF

In an interview with Bloomberg, Sonnenshein discussed the ongoing dilemma around the approval of a spot BTC ETF and how the SEC dragging the decision around it is only preparing Grayscale to take any route necessary to make it happen.

Since the announcement in October last year, Grayscale has been doing everything to make sure that the request of converting the Grayscale Bitcoin Trust (GBTC) into an ETF plays in its favor.

But the Securities and Exchange Commission has only been delaying the process. Commenting on the same, Sonnenshein said,

“It’s really important that investors know that we have and will continue to advocate for them but their voice can actually be heard through this process as well. And so the SEC has opened up this comment period for investors to advocate why they want an ETF.”

He believes that it is essential for investors to actively support the ETF since, currently, GBTC has investors across all the 50 states of the USA with more than 800k accounts.

This could not only tip the decision to their corner but also keep the SEC’s primary concern intact. Adding to the same, Sonnenshein said,

“Every single day that it [GBTC] is trading and being bought and sold by investors and is not being folded into the familiarity and the protections of the ETF wrapper we really don’t feel that the SEC is doing everything they can to actually protect investors. “

The next date for this decision is set in July, and upon being asked if Grayscale would go down the path of an APA lawsuit in case of rejection, Sonnenshein stated,

“I think all options are on the table.

GBTC Today

Even if a GBTC ETF is approved, it will need to be alluring enough to actually gather investors, and GBTC’s current state is far from that.

Despite the multiple rallies since last year, GBTC has been slipping consistently and is presently trading at a massive discount of 26.22%.

Grayscale Bitcoin Trust (GBTC) is trading at a 26.22% discount | Source: Ycharts

While Sonnenshein believes that post-conversion into ETF, investors will realize the true potential of GBTC, and those willing to stick around for the long term will be able to reap benefits of the same.

As of today, multiple well-performing ETFs such as the ProShares Bitcoin Strategy ETF (BITO), VanEck Bitcoin ETF (XBTF), and Valkyrie Bitcoin ETF (BTF) already exist. Thus taking on them would be a big challenge for Grayscale when its ETF comes out.

BITO: Rising Tensions in Europe Creates Opportunities for Bitcoin

At launch time, the cryptocurrency was valued at $65K compared to $38.7K today. However, after the dip to the $35K level suffered in the final week of January, things are looking better for BITO, which, it must be mentioned does not invest in bitcoin directly. Still, as seen in the orange chart below, the ETF’s share price is closely correlated to bitcoin‘s, depicted here in purple.

Comparison
Comparison of price performance

My aim with this thesis is to analyze BITO’s performance in the last month when it gained 15.63% compared to the S&P’s negative 2.39% (-2.39%). This period coincided with the Russian aggression against Ukraine and the imposition of economic sanctions by the United States and its allies.

Invasion and economic sanctions benefiting bitcoin

First, the concept of an economic sanction against countries that go against U.S interests whereby their foreign currency reserves are frozen is not something new. Some of these sanctions remind us of the ones imposed on Huawei two years back and which hit the Chinese telecom giant so hard that it lost billions of dollars of sales. Iran has also been previously impacted by sanctions which severely curbed the ability of its banks to trade in foreign currencies.

This time, America and its allies have gone a step further by punishing Russia which happens to be the world’s eleventh-largest economy by nominal Gross Domestic Product and a giant natural gas exporter. Some of the country’s banks have been barred from utilizing the Swift banking network, which severely limits their ability to receive or issue payments worldwide.

Other measures include drastically limiting Russia’s access to European capital markets and crucial technologies including semiconductors, electronic components, and software. Additionally, sanctions that were intended to hit individuals in Mr. Putin’s circle of power like freezing of their assets mostly in European territories have unfortunately reverberated on ordinary citizens as they queued to withdraw foreign currency from local banks.

Moreover, Russia which has about $630 billion of reserves in dollars is being prevented from accessing it. This is a huge amount and means that the idea of the dollar being viewed as a worldwide reserve currency plus a safe store of value is now jeopardized and only applies to countries that abide by U.S. values and interests. This level of currency weaponization is something unprecedented and paves the way for alternative means of transacting or stores of value, with one of them being cryptos.

Also, many are turning to cryptos because of practical benefits.

First, in light of their own currency losing value similarly to ice melting in the sun, crypto represents a safe store of value for Russians and Ukrainians alike. Second, if you are a Ukrainian refugee, it’s easy to transport as people only need to memorize the seed phrase. In comparison, gold and paper-based currencies like dollars or the European euro can be easily stolen by corrupt border guards. Storing bitcoins on an exchange constitutes some risk but is still better than transporting paper or metals.

Furthermore, cryptocurrency donations have poured in to support pro-Ukraine groups with NGOs, and volunteer groups have received 30 million dollars in form of cryptocurrencies since the Russian invasion. Bitcoin donations are also pouring in to support Ukraine’s military because it’s quick and easy, as it bypasses national financial and monetary regulations.

Thus, crypto-assets have emerged as an alternative funding method as they enable cross-border donations that circumvent financial institutions that might otherwise block payments. Also, at this stage, it is hard to see any action by U.S. regulators which may impede the flow of money into Ukraine.

BITO both as investment and trading tool

Increased flow levels led to higher bitcoin demand, but, BITO’s underlying fund does not invest directly in the digital coin as I mentioned above. Instead, as the first U.S. bitcoin-linked ETF, it provides exposure to bitcoin futures contracts. Now, a contract is normally a term used for the commodities market and allows investors to speculate on a product’s future price in order to gain from short-term price movements without holding it. In the case of BITO, it is bitcoin.

As per the fund managers, BITO “also offers investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way”.

However, historically speaking, the fund has failed in its objective to provide capital appreciation, at least for those who have held it from inception as illustrated by an initial investment of $10K being worth less than $7K today.

capital appreciation
Growth of $10K invested in BITO (www.proshares.com/our-etfs/strategic/bito)

Still, due to the liquidity factor and the fact that it is volatile, BITO can enable traders to achieve considerable gains. An example is an investment done around October 27 when the share price was around $38 being valued at $43 just two weeks later.

For this matter, BITO’s average daily share volume at 8 million is nearly eight times more than the Valkyrie Bitcoin Strategy ETF (BTF) which was incepted just days after BITO and also holds future contracts. The ProShares ETF has $676 million of assets under management compared to only $33.58 million for its peer. Both ETFs charge fees of 0.95%.

comparing
Comparing BITO and BTF (seekingalpha.com/symbol/BITO/peers/comparison)

Thus, investing in bitcoin futures contracts through BITO allows investors to better profit from short-term price movements regardless of the long-term direction and this is helped by the fact that crypto enjoys international recognition, making it suitable for everyone at anytime and anywhere in the world.

The risks and the long term rationale

However, keeping and paying with bitcoin comes with risks as the value of a currency is largely dependent on people’s trust. The trust level shot up with the events in Ukraine mainly due to erosion in confidence in traditional or fiat currencies caused by uncertainty. However, cryptocurrencies remain largely unregulated, extremely volatile, and not completely immune to hacker attacks due to the fact that they are digital in nature.

Still, relativizing risks, I consider that in view of heightened tensions in Ukraine, high-inflation concerns in Europe due to rising energy costs, and the euro losing ground against the dollar, there are more opportunities for bitcoin which is based on blockchain software residing on a decentralized network of computers around the globe.

Thus, virtually available bitcoin now looks relatively less vulnerable compared to physical currencies sitting in central banks whose dollar assets may not prove useful when most needed, depending on whether their leadership is aligned with the West.

The above factors should gradually contribute to making crypto assets more central to finance and payments.

Therefore, given the possibility of other countries being sucked into the conflict, there could be wider adoption of crypto somewhat similar to El Salvador where there was a decision to adopt bitcoin as legal tender last year. Even if governments do not go that far, some Eastern European leaders may order their central banks to diversify some of their dollar assets into bitcoins as a precautionary measure.

There is another factor that should increase demand for digital assets.

For this purpose, in addition to the crowd funding aspect, whereby the objective is to raise funds from common people for supporting Ukrainians, there are also projects based on Non-Fungible Tokens or NFTs.

Thus, OpenSea, the largest NFT marketplace is hosting a collection of unique artworks by Artists for Peace and collectors can bid for about 60 pieces in Ethereum (ETH-USD) with the proceeds going towards supporting the Ukrainian people. Now, Ethereum is different from bitcoin, but, as the second cryptocurrency by market valuation, its wider usage should give support to the crypto world in general.

Coming back to BITO, for those who have held to their investments, the ETF represents a safe way to remain invested in the cryptocurrency without risk of theft or misappropriation.

Finally, my bullish stance is firstly reinforced by crypto breaking its correlation with (or decoupling from) the tech sector as I had initially pointed out in my article on the Grayscale Ethereum Trust (OTCQX:ETHE) two weeks earlier. Hence, BITO (in blue) is now outperforming the Invesco QQQ Trust (QQQ).

Chart Data by YCharts

Second, according to Zero Hedge, there are reasons to think that the surge in bitcoin’s value and by ricochet BITO’s share price was more the result of investors expecting a surge in demand from Russia than an actual increase. Thus, more crypto demand should sustain the ETF’s upside. Meanwhile, demand for gold as a safe haven asset is up showing that established hedging mechanisms still work.

Taking into consideration these factors I am bullish on BITO for the long term, but do not exclude a surge to $30 by mid-2022, a level last reached at the end of December. This should be also driven by more support from institutions like Citadel, the largest U.S. market maker which is now more favorable to bitcoin.

Finally, at $23.53, BITO is currently available at a slight discount to NAV of $0.03.

Valkyrie’s Bitcoin Mining ETF to be Rolled Out on Nasdaq

With Bitcoin prices picking up pace a new Bitcoin mining backed ETF is set for listing on February 8. As per reports, the Valkyrie Bitcoin Miners ETF received approval for listing on the Nasdaq exchange, according to a Monday filing with the Securities and Exchange Commission (SEC).

Another Bitcoin ETF

Valkyrie Investment filed a post-effective amendment for the Valkyrie Bitcoin Miners ETF on January 26, after which the firm sought immediate acceleration of its effective date. For now, the Bitcoin Miners ETF will begin trading on the Nasdaq on Tuesday under the ticker WGMI. 

According to a January filing with the SEC, the investment vehicle will not offer direct exposure to Bitcoin (BTC), but at least 80% of its net assets will be through securities of companies that ‘derive at least 50% of their revenue or profits’ from BTC mining or providing the hardware or software related to mining. Furthermore, the filing added that Valkyrie would invest up to 20% of the ETF’s net assets in companies holding ‘a significant portion of their net assets’ in Bitcoin.

Reportedly, Nasdaq joined the request in the late hours of Monday since the exchange approved the fund to list. On the same, the Valkyrie CEO Leah Wald was reported as saying that ‘an increased focus and desire to gain exposure to Bitcoin miners from investors’ prompted the company to apply to the SEC to offer the exchange-traded fund. 

Another BTC Bull Run?

Soon after the ProShares Bitcoin Strategy ETF (BITO) in the New York Stock Exchange, Valkyrie became the second asset manager to offer a Bitcoin Futures ETF in US markets in October 2021. At that time the approval of a future BTC ETF gave a decent push to Bitcoin spot prices triggering a BTC bull run. 

After the launch, BITO finished in the top 15 ETF launches of all time after trading $250 million worth of shares in its first 15 minutes, while on the second day it became the fastest ETF ever to hit $1 billion in assets.

Over the last year, various Bitcoin futures ETFs have been approved and the high market interest in the ETFs are indicative of rising institutional interest in the asset. That said, the same also strengthens BTC’s long-term narrative as an investment instrument. 

As for Bitcoin’s spot price, BTC was up over 15.61% in the last week trading at $44,319 at press time. Bitcoin’s renewed uptrend sparked considerable retail interest too as trade volumes noted a decent uptick. Furthermore, on the back of the BTC gains the global crypto market cap was once again above $2 trillion noting, a 6.43% increase over the last day.

US SEC Rejects Fidelity’s Bitcoin Spot ETF, as BTC Price Still Struggles

Another Bitcoin bear market and another rejected spot ETF have left market participants in a gloomy state. On January 27, the spot Bitcoin ETF proposal from investment giant Fidelity was shown red light by the Securities and Exchange Commission of the US.

SEC’s Disapproval of BTC Spot ETF

On Thursday morning, according to a newly released filing, the SEC handed down its disapproval for Fidelity’s spot ETF. Over the last few months, the regulatory body has raised concerns around cryptocurrency-related frauds, manipulation, and investor protection.

While similar concerns have been cited by the SEC for many years, they seem to have tightened their hold around crypto regulations of late. 

SEC’s disapproval of BTC spot ETF dates back to its rejection of a Bitcoin ETF proposal put forward by the Winkelvoss brothers Cameron and Tyler, owners of the Gemini exchange.

In the statement released the SEC stated that any rule change in favor of approving the ETF would not be aimed at preventing ‘fraudulent and manipulative acts and practices’ nor would it necessarily ‘protect investors and the public interest.’

Talking about the BZX exchange, the SEC added: 

“BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section.”

That said, the regulatory body extended its deliberation window to approve or deny the offering in July and then in November following Fidelity’s application in March 2021. 

This isn’t the only spot ETF that was turned down by the US SEC, in fact, just last week, the regulatory body turned down a proposed spot ETF focused on Bitcoin from First Trust and Skybridge Capital on similar grounds. A decision on an ETF submission from Stone Ridge and NYDIG is expected by mid-March. 

The spot ETF Tussle Continues

In October 2021, SEC approved the first-ever Bitcoin futures backed ETF which was launched by ProShares trading on the New York Stock Exchange. Other approvals that followed included the Valkyrie Bitcoin Strategy ETF and the VanEck Bitcoin Strategy ETF.

The futures-ETF approval in October sent BTC’s price up by almost 25% and the positive narrative around the top crypto asset at that time also helped it reach the all-time high of $69,000 in November. 

Seemingly, however, SEC hasn’t had a good outlook towards BTC spot ETFs and in December 2021, the regulator rejected investment firm Kryptoin’s proposal to list a spot Bitcoin ETF. It has also rejected spot Bitcoin ETF proposals from WisdomTree. 

Notably, Bitcoin’s price was still below the crucial $40,000 mark as the asset traded at $36,664.37 noting 3.45% losses at press time. The recent weekend losses combined with the BTC flash crashes throughout January have affected the coin’s trajectory. BTC was down 47.13% from its all-time high at the time of writing as the king coin’s 1-year ROI vs USD noted merely +18.66%. 

Asset Manager Fidelity to Launch Physical Spot Bitcoin ETF in Canada

The United States Securities and Exchange Commission (SEC) has rejected numerous Bitcoin ETF applications in the past. However, that hasn’t stopped asset managers and investment firms from applying again.

More Asset Managers are Entering the Crypto Space

Fidelity, the fourth-largest asset manager in the world with more than $4 trillion in assets under management, has applied to launch a physical spot Bitcoin ETF in Canada. The ETF will track Bitcoin’s spot price, giving investors exposure to the leading cryptocurrency.

According to the Financial Times, the Fidelity Advantage Bitcoin ETF (FBTC) is designed to invest in “physical” spot bitcoin. This latest development comes just a few weeks after the US SEC rejected VanEck’s Bitcoin ETF proposal.

Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research, stated that “It’s significant because the top-tier asset managers tend to be fast followers,” said Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research. “They tend to take more of a wait-and-see approach towards investment trends, piggybacking on developments that have often been created by smaller, more nimble asset managers.”

The US is Still Behind on spot Bitcoin ETF

Fidelity has applied to launch a spot Bitcoin ETF in the United States, but the SEC is yet to approve the application. The US SEC has rejected numerous spot Bitcoin ETF proposals in the past, most recently the VanEck application.

According to the SEC, the cryptocurrency market is not ready for a spot Bitcoin ETF at the moment. The SEC had mentioned on numerous occasions that it still has concerns regarding the cryptocurrency market, especially in terms of price manipulation.

The regulatory agency had approved three Bitcoin futures ETFs. These funds track Bitcoin futures instead of the cryptocurrency’s spot price. The Bitcoin futures ETFs in the United States are; ProShares Bitcoin Strategy ETF (BITO), Valkyrie Bitcoin Strategy ETF (BTF) and VanEck Bitcoin Strategy ETF (XBTF).

Despite its rejection, market analysts and asset managers believe it is a matter of time before the SEC approves a spot Bitcoin ETF.

Greyscale Gets Scaled Down by Bitcoin ETFs

The recent launch of Bitcoin futures ETFs is slowly eroding their prowess as the big cheese of BTC.

1123 chrt 1

In the same time frame, Purpose Built Bitcoin ETF’s holding has grown as Greyscale continues to shrink. The fact that Greyscale’s premium in relation to their net asset value has also shrunk, currently selling at a 15% discount, is telling when you consider that in the same time span, Bitcoin has gone up in value. For this reason, their assets under management have rebounded back to just under $40 billion in Bitcoin alone.

1123 chrt 2

Their possible saving grace was their early pivot into Ethereum, and while they still have just $12.5 billion in Ethereum on their balance sheet, a number which has been steadily growing. Greyscale’s Ethereum Trust (ETHE) also follows the price of Ether much better than GBTC does Bitcoin. It won’t be long before Ethereum ETFs challenge this market as well.

11 23 chrt 3

While the CME’s Ethereum futures have had a less than explosive start, I believe that ETFs will ignite a rally in Ethereum and bring Ether to a new all-time high just like Proshares did with Bitcoin. Others are less optimistic, ProShares and digital asset manager VanEck submitted filings with the SEC earlier this year to develop Ethereum-based ETFs, but they later withdrew their proposals. ProShares and VanEck both declined to comment on their decision. According to McClurg of Valkyrie, regulatory clearance before the end of next year is a “long shot” due to little trading volume in Ethereum futures markets. But hopes for first quarter of 2022 are still strong.

U.S. and E.U. regulators continue to hold outdated views of BTC;

While the third-world taking charge in the digital space race

During the recently held “Latin America Bitcoin and Blockchain Conference,” the El Salvadorian President, Nayib Bukele, came on stage looking like a character straight out of “Grand Theft Auto Vice City,” but his ambitions were closer to Alexander the great, according to the self-proclaimed dictator (jokingly) of El Salvador.

“Invest here and make all the money you want,” Bukele said in English, dressed all in white and wearing a reversed baseball cap, in the beach resort of Mizata. “This is a fully ecological city that works and is energized by a volcano.”

His plan is to build the world’s first “Bitcoin City,” funded initially by bitcoin-backed bonds. Half of the VAT levied would be used to fund the bonds issued to build the city, and the other half would pay for services such as garbage collection, Bukele said, estimating the public infrastructure would cost around 300,000 bitcoins.

As previously reported by Reuters, Samson Mow, chief strategy officer of blockchain technology provider Blockstream, told the gathering that the first 10-year issue, known as the “volcano bond,” would be worth $1 billion, backed by bitcoin and carrying a coupon of 6.5%. Half of the sum would go to buying bitcoin on the market, he said. Other bonds would follow.

After a five-year lock-up, El Salvador would start selling some of the bitcoin used to fund the bond to give investors an “additional coupon,” Mow said, positing that the value of the cryptocurrency would continue to rise robustly.

The bond would be issued on the “liquid network,” a bitcoin sidechain network. To facilitate the process, El Salvador’s government is working on a securities law, and the first license to operate an exchange would go to Bitfinex, Mow said.

Crypto exchange Bitfinex was listed as the book runner for the bond on a presentation behind Mow.

©Thegoldforecast.com

 

5 Best Cryptocurrency ETFs to Buy

Introduction to Bitcoin and cryptocurrencies

Bitcoin and cryptocurrencies have gained traction in recent years. What started with Bitcoin has grown to become a $3 trillion industry, with thousands of cryptocurrencies now available to investors all over the world.

Cryptocurrencies have become investment assets available to both retail and institutional investors. The entry of institutional investors into the cryptocurrency space has created the need to launch crypto-focused funds, allowing them to gain direct and indirect exposure to BTC and other cryptocurrencies.

What are ETFs?

An exchange-traded fund (ETF) is a security designed to track a cryptocurrency, an index, sector, commodity or other types of assets. Unlike the regular cryptocurrencies that are traded on crypto exchanges, the crypto ETFs are bought and sold on stock exchanges like regular stocks. An ETF can be designed to track the performance of anything ranging from an individual stock, commodity or asset to a large and diverse collection of securities.

An exchange-traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other assets, but which can be purchased or sold on a stock exchange the same way a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities. ETFs can even be structured to track specific investment strategies.

Top five crypto ETFs to buy now

There are numerous ETFs that track the performance of cryptocurrencies. Here are the top five ETFs that give you exposure to cryptocurrencies.

ProShares Bitcoin Strategy ETF (BITO)

This is the first cryptocurrency-focused ETF approved in the United States, and it generated a lot of buzzes. The ProShares Bitcoin Strategy ETF tracks the performance of Bitcoin futures contracts. The funds hold different Bitcoin futures contracts and have grown to have more than $1.4 billion in assets under management barely a month after it was approved by the US SEC. The BITO ETF has a 0.95% annual expense ratio or $95 for every $10,000 invested. Thus, making it one of the best Bitcoin futures ETFs currently available to investors. As Bitcoin’s adoption continues to increase, BITO’s value would increase as more institutional investors seek to gain exposure to BTC.

BITO ETF chart. Source: FXEMPIRE

Valkyrie Bitcoin Strategy ETF (BTF)

The Valkyrie Bitcoin Strategy ETF (BTF) is also a Bitcoin futures ETF that was launched a few days after BITO was approved by the SEC. BTF trades on the NASDAQ stock exchange and, similar to BITO, doesn’t invest directly in Bitcoin. Rather, BTF holds front-month Chicago Mercantile Exchange Bitcoin futures. BTF has nearly $60 million in assets under management with a 0.95% expense ratio. This ETF is set to become even more popular amongst investors as Valkyrie plans to launch more crypto-focused funds over the coming months and years.

BTF ETF chart. Source: FXEMPIRE

VanEck Bitcoin Strategy ETF (XBTF)

The VanEck Bitcoin Strategy ETF gained the SEC’s approval in October but was launched on the CBOE exchange today. It is the third Bitcoin futures ETF available in the United States and is expected to gain adoption due to VanEck’s reputation as one of the leading investment firms in the country. XBTF debuted today on the NASDAQ stock exchange and is trading around the $60 per share mark. It could surge higher over the coming weeks and months as the demand increases.

Purpose Bitcoin ETF (BTCC)

While the US is yet to approve a single spot Bitcoin ETF, its North American neighbor Canada has already approved a few. The Purpose Bitcoin ETF (BTCC) is one of the largest spot Bitcoin ETFs in the world, with more than $1 billion in assets under management. BTCC’s price could rally higher over the coming years as more investors seek ETFs that have direct exposure to Bitcoin, especially as the United States continues to reject the launch of similar funds.

Amplify Transformational Data Sharing ETF (BLOK)

Amplify Transformational Data Sharing ETF (BLOK) is a fund that invests roughly 80% of its total assets in stocks engaged in the development of blockchain technologies. BLOK doesn’t track an index but rather focuses on various value and growth stocks within the cryptocurrency space. Some of BLOK’s top holdings include MicroStrategy, PayPal, Coinbase and Square. This fund has an expense ratio of 0.71%, a one-year return of 195%, and currently has more than $1 billion in assets under management. BLOK’s value could increase from its current $59 per share as the underlying stocks continue to perform due to the cryptocurrency market growing bigger over the coming months and years.

VanEck’s Bitcoin Futures ETF to Start Trading Tomorrow Following Spot ETF Rejection

The VanEck Bitcoin Strategy exchange-traded fund is set to go live tomorrow, a few days after the SEC rejected the firm’s spot Bitcoin ETF proposal.

XBTF to Start Trading Tomorrow

An official notice by the Chicago Board Options Exchange (CBOE) revealed that the VanEck Bitcoin futures ETF would start trading tomorrow, November 16. The CBOE said it is pleased that an ETF will be listed on its platform and will begin trading as a new issue on November 16, 2021.

The VanEck Bitcoin strategy ETF will trade on the CBOE under the ticker symbol XBTF starting tomorrow. The VanEck Bitcoin futures ETF joins the other two already approved by the United States Securities and Exchange Commission (SEC)

The US SEC approved the ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF last month, and they are already trading on US stock exchanges. The SEC also approved the VanEck Bitcoin strategy ETF last month, but the investment firm delayed its launch.

This latest development comes a few days after the SEC rejected VanEck’s spot Bitcoin ETF application. The United States regulatory agency has always maintained that it is concerned about possible manipulation in the Bitcoin market, and that would affect investors.

The United States has rejected numerous spot Bitcoin ETF proposals in recent years and could reject the others currently on its table. The rejection comes despite Bitcoin’s market cap now over $1 trillion and Canada and Brazil both having Bitcoin ETFs.

BTC/USD chart. Source: FXEMPIRE

BTC Still Struggling Below $65K

The leading cryptocurrency reached a new all-time high above the $69k last week. However, BTC has been struggling around the $65k region over the past few days. At press time, BTC is trading at $64,189 per coin, down by 0.07% over the past 24 hours.

Despite its recent performance, the short and medium-term outlook for BTC remains positive. Several analysts and market participants expect BTC to reach at least $100k before the end of the year.

US SEC Rejects the VanEck Spot Bitcoin Exchange-Traded Fund

The United States Securities and Exchange Commission has announced that it had rejected the VanEck Bitcoin ETF proposal.

US SEC Rejects Another Spot Bitcoin ETF Proposal

The United States Securities and Exchange Commission (SEC) announced earlier today that it had rejected a bitcoin exchange-traded fund run by VanEck. The ETF sought to track the spot movement of Bitcoin’s price.

This latest development doesn’t come as a surprise as the SEC has made it clear on numerous occasions that it fancies approving a spot Bitcoin ETF at the moment. The regulatory agency has always maintained that it is concerned about possible manipulation in the Bitcoin market, and that would affect investors.

The VanEck Bitcoin ETF proposal was filed by the Cboe BZX Exchange in March. CBOE wanted to list the VanEck Bitcoin ETF and sought to become the first fund that was tracking Bitcoin’s spot price in the United States.

While the US continues to reject Bitcoin ETF proposals, Canada is already leading the way in the market as it has approved a few Bitcoin and Ether ETFs. American institutional investors like Ark Invest are gaining exposure to spot Bitcoin ETFs in Canada.

The rejection comes barely a month after the SEC approved the first futures-based bitcoin ETFs: the ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF. The SEC said it prefers to approve ETFs that track Bitcoin futures instead of Bitcoin’s spot price.

BITO and BTF Dip After SEC’s Rejection

The ProShares Bitcoin Strategy ETF (BITO) and Valkyrie Bitcoin Strategy ETF (BTF) have been trading in the red zone since the SEC rejected the VanEck Bitcoin ETF proposal. BITO and BTF are currently the two existing Bitcoin-related ETFs in the United States.

BITO ETF chart. Source: FXEMPIRE

At press time, BTF is down by 1.34% and is trading at $25.32 per share, while BITO is trading at $45.15, down by 1.23% over the past few hours. The ETFs could drop lower by next week as the market adjusts to the SEC rejection news.

Bitcoin Analysis – When is the Next Bull Run

Valkyrie Bitcoin ETF launch seems to have no effect on Bitcoin’s surge as many Bitcoin enthusiasts were expecting. The same day Bitcoin hit the new ATH, the first cryptocurrency also hit a new milestone, it reached a $1.26 trln market cap.

CME Bitcoin futures is currently showing a growth up to December, Bitcoin’s November futures are up 0.02%, whilst the December futures are up 0.19%. This might indicate that Bitcoin is expected to continue the climb up to December and possibly reach the $72K mark.

One of the indicators many Bitcoin traders watch is the Fear and Greed index. The indicator is currently at Extreme Greed, which might push sellers to push the BTC price down.

Bitcoin is back to tracking the US Dollar index, week started with a retest of October 22 high which resisted the uptrend continuation. BTCUSD since then has been waiting for the release of the US economic data, CB Consumer price confidence and the New home sales which are coming out later today. The released data will be moving the price.

On-chain Bitcoin data, chiefly the Bitcoin fee, is a very healthy median for Bitcoin. On the ground that Bitcoin is being used as a legal tender in El Salvador and many countries willing to adopt Bitcoin as a legal tender, low transaction fees are crucial.

On the other hand, the daily Bitcoin chart signals a correction ahead. Mainly the correction began when Bitcoin reached its dynamic resistance of August 9. MACD and RSI indicators on a daily chart are bearish, Bitcoin closed below the support of the uptrend channel and might correct down to $53100 if it doesn’t close above $63800.

Chart by TradingView

Since its massive 2021 uptrend Bitcoin’s price was testing EMA50 as support.

Chart by TradingView

Hence, if BTCUSD doesn’t close above $63800-$64100 and there is no significant bull power, bears might take control of the price and push the price lower, to retest EMA50. Supports to watch are $55300, $53100 and $53000.

Whenever you see any analyst claim that Bitcoin price could hit $110K, don’t be pessimistic, refer to this uptrend parallel channel. For the longer term, Bitcoin is very likely to hit this mark by December 2021, if BTC is backed by a high uptrend impulse.

Chart by TradingView

4-Hour BTCUSD has a Head and Shoulders pattern being formed. This pattern also suggests that Bitcoin might show correction if it stays below $63800 and $64100 which is a Fibo 0.618 of the October 21 drop.

Chart by TradingView

To sum up, Bitcoin is still one of the most promising assets to invest in, its growing scarcity and the migration of miners to the US show a solid confidence in its continuous growth. Decreasing fees on Bitcoin’s network and its popularity assists in the adoption of Bitcoin globally. Robinhood, for instance is adding its own crypto-wallet and already has 1 mln subscribers, hence I highly recommend to keep an eye on BTC.