Bitcoin bulls may be in for a ride on a rocket ship this year — as opposed to the speedboat they are currently chilling on — if a long speculated exchange-trade fund (ETF) for the largest crypto debuts.
Somewhat under-the-radar, ETF heavyweight VanEck filed a Form S-1 registration statement for a new bitcoin ETF called the “VanEck Bitcoin Trust” on Dec. 30. Unlike VanEck’s last filing for a bitcoin futures ETF in 2017, the new one would hold physical bitcoin. That key distinction could create an even bigger imbalance between the demand for bitcoin and supply than the one that has recently sent prices surging, argues one Wall Street pro that covers the crypto space.
“With the price of bitcoin reaching new heights, one of the questions that has arisen is whether 2021 will be the year in which the U.S. Securities and Exchange Commission finally approves a bitcoin exchange-traded fund that would enable anyone to purchase the cryptocurrency as easily as they could buy a stock. An ETF that tracks the virtual currency could have a dramatic impact on both its growth as an asset class and the industry being built around it, in our view,” says BITG analyst Mark Palmer.
But a bitcoin ETF is far from a sure thing this year — or any year for that matter — warns Palmer.
The SEC has a history of shooting down applications to create bitcoin ETFs on the grounds of high potential for fraudulent activity and market manipulation. Palmer notes in one day alone in August 2018, the SEC rejected nine bitcoin ETF applications.
Palmer contends bitcoin’s stunning advance these past few months fueled by the arrival of institutional buying could finally change sentiment inside of the SEC.
In December, insurance giant MassMutual unveiled a $100 million investment in bitcoin for its general investment account. PayPal continues to buy up bitcoin to support the launch of the capability to buy, sell and trade cryptocurrency from a PayPal account. And Square recently said it will allow customers for the first time to receive bitcoin back on transactions, a move that triggers the payments platform to buy more bitcoin.
“Several industry participants with whom we spoke were optimistic about the likelihood that a bitcoin ETF could attain regulatory approval during the coming year, and they were unanimous in their view that a stamp of approval from the SEC could serve as a significant catalyst for the currency and the space by promoting mainstream acceptance,” Palmer adds.
In the meantime, bitcoin (BTC-USD) prices remain hot.
Bitcoin prices surged beyond the $34,000 mark this weekend. They fell slightly below the $30,000 mark on Monday. Over the past year, bitcoin prices are up a sizzling 338%.
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