On Wednesday (8 August 2018), Dan Morehead, the founder and CEO of crypto-focused investment firm Pantera Capital, said in an interview on CNBC's Fast Money that it would be a long time before a Bitcoin ETF gets approved by the SEC, and investors should instead be focused on the Intercontinental Exchange (ICE)'s announcement about its upcoming cryptocurrency exchange Bakkt.
The Bitcoin segment on Fast Money started with news correspondent Bob Pisani talking about the U.S. Securities and Exchange Commission (SEC) delaying a decision on the VanEck-SolidX Bitcoin ETF:
"The problem here is that we are no closer to a Bitcoin ETF despite a novel approach to getting around the issue that bothers the SEC... A decision was put off until September 30th, but don't kid yourself: the SEC is likely not considering anything other a lengthy brief on why they will deny the ETF at that time, just as they denied the Winklevoss Bitcoin ETF last month. The reason they are likely to deny it is that it just doesn't fully address the issues that worry the SEC about Bitcoin."
Pisani then went to explain what he thought was the SEC's chief concern about Bitcoin: "Most Bitcoin trading occurs outside the United States on unregulated exchanges that are subject to fraud and manipulation." He then said that the VanEck-SolidX Bitcoin ETF application tries to address these issues in two ways:
- a very high price tag ($200,000) to "scare away" most retail investors; and
- an insurance component to protect investors against theft of the coins
However, Pisani does not think that this is enough to satisfy the SEC. As for how much a Bitcoin ETF getting approved matters, he thinks it is very important for the market. He points out that if you look at the movements in the price of Bitcoin between 1 July 2018 and 8 August 2018, you can see that the Bitcoin price seems to be largely influenced by the speculation around a Bitcoin ETF, which he thinks is because Bitcoin does not seem to have much momentum on its own, and needs new buyers coming in to move the price higher.
Next up was Dan Morehead. He was asked what he thought about Pisani's opinion that the latest decline in the Bitcoin price seemed highly correlated with the difficulty of getting SEC approval for a Bitcoin ETF. Morehead explained why he thinks investors are overreacting to the news about the SEC postponing a decision on the VanEck-SolidX Bitcoin ETF:
"I think the main thing to remember is that Bitcoin is like very early-stage venture, but has a real-time price feed, and that's a unique thing... People get really excited about the price and overreact, I think, to the announcements... The ETF rejection is the same story we've had for five years. I think the SEC has been very cautious with an ETF."
As for how essential having a Bitcoin ETF is to stopping Bitcoin's price decline, Morehead said that it was all a matter of perspectiv
e since the Bitcoin price is up 82% year-on-year, and so it is still doing very well. He also implied that investors should not be holding their breadth waiting for a Bitcoin ETF to get approved:
"I think it's going to be quite a long time until an ETF is approved... The last asset class to get approved for ETF certification was copper, and copper has been on Earth for 10,000 years, and it just got approved in 2012 after a very long multi-year process. I think ETFs and Bitcoin still have a quite a ways to go."
Morehead was then asked what he saw as the next catalyst for the Bitcoin price going up. Morehead answered:
"In the last three or four business days, we've had two pieces of news. The ETF being rejected for the fifth time—that doesn't seem very interesting to me. But on Friday, the parent company of the New York Stock Exchange, which also owns $42 billion of other exchanges, launched a cryptocurrency exchange called Bakkt. That is huge news. That is going to be a very profound impact over the next five or 10 years for the markets, and, to my mind, that's what people should be focused on."
Finally, with regard to where he thinks the Bitcoin price will go, Morehead said that it could go down, but he thinks that "a year from now, it'll be much much higher than it is today."