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Bitcoin has had a relatively flat week as it takes a breather after recent excitementWhy The Bitcoin ETF The SEC Might Approve Is “Inferior


Bitcoin BTC BTCUSD
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Bitcoin has had a relatively flat week as it takes a breather after recent excitement. The market leader hit highs of around $48k over the weekend, though fell to a low of $44k early this morning. It’s currently back changing hands for just over $45k, but resistance at around $50k is looking hard to beat at the moment.

 

Despite this, the market is still feeling positive. The Fear and Greed Index, which measures market sentiment, continues to sit comfortably in the “Greed” area. It has now been in the “Greed” area for more than a week, the first time it’s had such a prolonged streak since early May. There was especially good news this week from AMC, the cinema giant, who announced they will look to begin accepting bitcoin by the end of the year.

 

The big concern continues to be relatively-low volumes, with the activity on the leading spot exchanges declining again of late. The 7-day average real bitcoin trading volume pushed towards $7 billion last week, but we’re now back down to $5 billion. As noted by Arcane Research, “it’s not surprising, nor concerning, to see the volume decline when the BTC price stays flat. However, if the price starts pushing higher again on declining volume, it can signify an exhausted market, and it will probably not be a sustainable move. We want to see a clear uptick in volume if the BTC price jumps up towards $50k again.”

 

The U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler hinted at the possibility of finally approving a Bitcoin Exchange Traded Fund (ETF) at a speech during the Aspen Security Summit. An ETF has been one of the “Holy Grails” for the crypto market and, similar to the legendary object, many have pursuit it with no luck.

However, the SEC Chair acknowledged the need for investors to gain exposure to a market which he considers to be “highly irregulated”. While a Bitcoin ETF backed by physical BTC was ruled out by the regulator, a derivatives-based ETF could be approved due to its potential to offer investors “significant protections”.

The Bitcoin futures-based ETF would have to use derivates provided by the Chicago Mercantile Exchange (CME). These are regulated by the U.S. Commodities Futures Trading Commission (CFTC), the ETF itself would be regulated by the SEC. Thus, the product would be under the supervision of two U.S. regulators.

A few days after these remarks the market reacted, and many players filed their BTC futures ETF petitions with the Commission. Bloomberg Intelligence’s (BI) expert James Seyffart has recorded over 20 crypto-based ETFs send to the SEC which has not received a definitive response, as seen below.


Bitcoin BTC BTCUSD

Source: James Seyffart Bloomberg Intelligence


BI’s ETF analysts Eric Balchunas and Seyffart commented on how a derivative-based ETF will be an inefficient tool for investors to gain Bitcoin exposure. In a note called “The Unintended Consequences of Bitcoin Futures ETFs”, the experts said

Moreover, the BTC Futures financial product could be significantly more expensive than the GBTC, and a physically-backed BTC ETF. Balchunas added:At the time of writing, BTC trades at $45,192 with a 1.4% loss in the daily chart. The cryptocurrency has experienced a small pullback from its weekly high and could find support at $43,500.

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