Bitcoin ETFs: SEC Postpones Decision on Direxion’s Proposals Until September

Avi Rosten

The SEC (the US Securities and Exchange Commission) has said today that it has deferred its decision on approval for five bitcoin ETFs (Exchange Traded Funds) until September.

The proposals, filed by Boston-based ETF provider Direxion Investments on January 4th comprise five applications: one for an ETF directly linked to BTC price, and four related to its price variation.

The SEC's report in the Federal Register – its Daily Journal – explains that the Commission:

finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change. Accordingly, the Commission, ... designates September 21, 2018, as the date by which the Commission shall either approve or disapprove the proposed rule change.

Importantly the SEC has not made any comment with respect to the highly-anticipated decision regarding ETF proposals from VanEck and SolidX – which have generated enormous expectation in the crypto-community, as well as over 250 comments on the proposal on the SEC website. The Direxion application in contrast, at the time of writing had only two comments.

With many believing this market excitement surrounding ETFs to be behind much of the bullish activity that prompted bitcoin’s substantial rise in price in the last week and today’s push past $8,000, prominent figures believe that the time is ripe for serious institutional investment into cryptocurrency.

Mike Novogratz, founder and CEO of Galaxy Digital Capital Management, in this vein recently remarked that he believes a “herd of institutional investors” is coming towards the cryptocurrency ecosystem” adding that they are “slowly coming to the realization that blockchain will be internet or Web 3.0.”

 

Featured Image Credit: "Securities and Exchange Commission" by "Scott S" via Flickr; licensed under "CC BY 2.0"

Notable Bitcoin Trader and Whale Not Bullish on the Hyperinflation Narrative

Colin Muller

Highly regarded Bitfinex trader and crypto whale J0E007 is not banking on the hyperinflation narrative, which is a highly popular notion in the cryptoasset industry, implying it's a fairy tale.

Screenshot from 2020-05-26 13-23-22.png(source: Bitfinex pulse)

This narrative, exhibited for example here, proposes that the aggressive fiscal and monetary intervention on the part of many central banks around the world will eventually lead to sharp devaluations in the values of many fiat currencies—and most importantly of the U.S. dollar.

Propagation of this concept of rampant fiat inflation in the cryptoasset space is generally tied to predictions of a huge increase in the price and/or market capitalization of Bitcoin and other cryptos, although most focus on the flagship cryptocurrency.

A Little More Complicated

In his post, JOE007 linked to a recent report from Alhambra Investments, an asset management and financial research outfit.

The report details lead analyst Jeffrey Snider’s view that the dollar is not going anywhere in terms of demand, although definitely not by virtue of the competence of the U.S. Federal Reserve in handling the unfolding economic crisis lit by COVID-19.

Conceptually, first, any strong desire to hold expensive dollar liquidity buffers is drawn from serious mistrust of systemic conditions – including the central bank’s place in them. If you thought Jay Powell well prepared in advance with effective countermeasures standing at the ready, buffers of any size need not apply.

Jeffrey P. Snider

In short, Snider contends that the Fed under chair Jay Powell has not responded appropriately to the emerging crisis with “effective countermeasures at the ready”; and this bungling in turn has led to a higher international demand for US dollars in order to sit on a larger and safer cushion of “expensive dollar liquidity buffers.”

A complicated subject, to say the least. The upshot for J0E007 being that the dollar-collapsing narrative may have some big holes in it—removing the keystone of that popular Bitcoin use-case narrative.

Featured Image Credit: Photo via Pixabay.com