bitcoin price 2018

2018 was a brutal year for the bitcoin price. Shortly after hitting an all-time high, the crypto bubble popped. Over the following twelve months, the bitcoin price slowly bled out to end the year on a low note.

Bitcoin began 2018 at $13,464 and ended the year at $3,742 – a 72% loss in value.

The total cryptocurrency market capitalization fell from $626.6 billion to $125.6 billion – an 80% drop.

Bitcoin price chart 2018
Bitcoin price chart 2018. Source: CoinMarketCap

How did bitcoin lose 72% in price?

To understand the phenomenal fall in price, we must go back to 2017 – a year of irrational exuberance and hype in the crypto space. Bitcoin became a mainstream talking point and hundreds of new cryptocurrencies emerged. “Initial coin offerings” promised easy returns.

But the mania quickly turned into anguish. As millions flooded to cryptocurrency, Bitcoin came up against severe scaling issues, hindering its adoption as a currency alternative.

And the reality of ICOs was laid bare. Most projects couldn’t possibly deliver on their wild promises. Many were nothing more than scams designed to part investors with their cash.

The subesequent 72% price crash in 2018 was the dose of reality.

Bitcoin price fall triggers layoffs across the industry

As the year progressed, blockchain and cryptocurrency firms began to announce layoffs. Many of these companies had raised money in crypto so the dramatic price falls tore away at their operating funds.

ConsenSys, a company that supports new projects on the Ethereum blockchain, announced a 50-60% staff cull. Steemit, a blogging platform powered by cryptocurrency, shed 70% of its staff.

In more high-profile layoffs, Bitmain -the world’s largest bitcoin mining company – is reportedly downsizing with up to 50% of staff members at risk. And cryptocurrency exchange Huobi is streamlining its team, although exact numbers are yet to be revealed.

This is the harsh reality of “crypto-winter.”

$1 billion crypto hacks

The discussion of cryptocurrency security reared its head again after the biggest exchange hack in history took place in January 2018. Coincheck was hacked to the tune of $532.6 million with further hacks at Bitgrail and Bithumb through the year.

The constant hacks weakened trust in the crypto exchange ecosystem and put further selling pressure on the bitcoin price.

Some progress is being made with a landmark move into crypto insurance from the Winklevoss Twins. All funds on their Gemini exchange and custody service are now fully insured.

Even traditional players are stepping into the ring as Fidelity announced a crypto custody service. Expect secure custody services, aka bitcoin banks, to develop at pace in 2019.

Bitcoin hits a regulatory brick wall

Cryptocurrency regulation continued to hinder progress throughout 2018.

The US Securities and Exchange Commission (SEC) took action against numerous ICOs. The SEC chairman concluded that “every ICO I’ve seen is a security,” which means stricter investor rules should be applied.

China maintained its ban on cryptocurrency exchanges, while South Korea authorities raided exchanges on suspicion of money laundering and tax evasion.

Most notably, the SEC rejected or pushed back at least nine bitcoin exchange-traded funds (ETFs). The inevitable launch of a bitcoin ETF is often cited as a major catalyst for the bitcoin price, but the continuous delays weighed on crypto prices throughout 2018.

Any good news for the bitcoin price?

There are plenty of potential price triggers to look forward to in 2019. The much-hyped Bakkt platform is expected in early 2019. Bakkt is a futures trading service settled in real bitcoin and is backed by ICE, the parent company of the New York Stock Exchange.

We will continue to see bitcoin ETF proposals thrown at the SEC. At least one SEC commissioner, Hester Peirce, is supportive of bitcoin and serious discussions are taking place. Expect this to dominate bitcoin conversation for the coming year.

Elsewhere, huge leaps are being made in cryptocurrency technology. The lightning network is rapidly gaining pace in a bid to facilitate micropayments for bitcoin. Blockstream’s satellites are now beaming the blockchain to every landmass on earth, eliminating the need for internet access for bitcoin transactions.

Ethereum and Ripple 2018 price roundup

Ethereum fared worse than bitcoin through 2018, falling 85%. ETH started the year at $880 and ended at $133.

Ethereum price chart 2018. Source: CoinMarketCap

Ripple XRP also fell 85%, starting the year at $2.31 and closing at $0.35.

Ripple XRP price chart 2018
Ripple XRP price chart 2018. Source: CoinMarketCap

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This time last year, everyone was rushing to predict how high bitcoin would go. We had outrageous price predictions of $200,000 per bitcoin and even $1 million.

Now, the current trend is predicting the bitcoin bottom. Considering most price prediction were wildly wrong, it’s safe to assume most people predicting the “bottom” might also be off the mark.

So how do you really tell when the price of an asset has bottomed?

Here are four ways traders use to identify when a market is bottoming out.

Note: Neither Block Explorer nor the author provides financial or investment advice and this article should not be construed as such.

1. Double bottom chart pattern

The classic sign of a market reversal is when a “double bottom” is formed on a market’s chart. It’s also called a “W pattern” because it resembles the shape of a W. Here’s what it looks like in chart form:

Double bottom chart
Source: Investopedia

It typically means that sellers have forced the price down to the lowest point. They tried to break it once and failed. They tried again, but the buyers proved stronger for a second time.

It signals the point where buyers are stronger than sellers and a reversal can begin.

Even if you see a double bottom pattern forming, it’s usually best to wait until we complete the full “W” shape and break out above the W, as indicated on the chart above. That would represent a true comeback.

Bitcoin is in the process of forming a short-term double bottom pattern, but it is not yet complete.

Bitcoin double bottom forming?
Source: CoinMarketCap

Of course, this chart pattern is no guarantee of a reversal. We need to look deeper into the activity of buyers and sellers. And that means taking a closer look at volume.

2. Lower volume on downward moves

In the simplest possible terms, a reversal takes place when more people are buying bitcoin than selling it.

So we need to look for signs that sellers are getting weaker and buyers are getting stronger. That means looking at volume.

“Volume” in this case refers to how much bitcoin is bought and sold in a given 24 hour period.

At the moment, more people are selling than buying. So the volume on downward moves is generally much bigger. 

More people are selling = bigger volume on downward moves.

What you’re looking for is that trend to change. We’re looking for lower volumes on each downward move.

That would indicate that the number of people selling is getting smaller and the downtrend is coming to an end.

Unfortunately, we’re not yet seeing that with bitcoin. As Max Boonen, founder of B2C2 told the Financial Times during the latest selloff,  “[Trading] volumes have been quite high in this move lower.”

To gauge the volume of buyers and sellers, you’ll need to look at more technical charts than the basic CoinMarketCap price charts. 

3. Higher volume on upwards moves

Next, we need to see more buyers coming into the market. 

In other words, we should also begin to see volume increase on the upward moves. That would indicate that more sellers are rushing in to buy bitcoin.

This is the simplest depiction of a market reversal: more people are starting to buy than sell.

4. Negative news headlines

This one is less of a technical indicator, but it’s a psychological sign that a bottom is coming.

The press tends to follow the crowd and track the broad sentiment. So if news headlines (especially in the bigger media outlets outside the financial and cryptocurrency world) are turning negative, it means most people are now fearful.

Anyone that does want to get their money out will probably do so after the mainstream negative headlines, leaving only the people willing to hold on.

It’s safe to say we’ve reached that moment with bitcoin. Here are just a handful of major headlines over the last week:

Bloomberg: Bitcoin’s Deepening Crash Now Approaches Its Worst Bear Markets

The Guardian: Only a Fool Would Have Bought Into Bitcoin Last Year. So Guess What I Did?

New York Post: The Bitcoin Pyramid Scheme Continues To Collapse

CNBC: Long, Dark Winter Ahead For Crypto

So, Has Bitcoin Bottomed?

According to these classic criteria, not yet. Although some of the signs are beginning to appear, it’s too early to call a true bottom. Volume is still heavy on the downward falls and the classic “double bottom” has not fully emerged.

On top of all that, technical analysis from charts isn’t 100% effective, and even less so in the new and volatile crypto markets.

In other words, it’s very difficult to predict a bottom and you should take any claims with a great caution.

Note: Neither Block Explorer nor the author provides financial or investment advice and this article should not be construed as such.

bitcoin price crash

As expected, the media has gone into a frenzy over the recent bitcoin crash. As we plunge below $4,000, the familiar cries of “bitcoin is dead” are ringing again.

True, bitcoin is now down more than 80% from its all-time high in December last year.

But now is a good time to remind everyone that we’ve been here before. Twice, actually. Bitcoin has suffered larger percentage falls than this and survived.

Worried about the crash? Here are 9 strategies for surviving the crypto crash.

Of course, that doesn’t mean history will repeat itself, but it does prove that bitcoin is resilient. Let’s take a quick look back through history.

June 2011 Bitcoin Crash

Top price: $30

Bottom price: $2

Percentage drop: 93%

How long to recover? Two years

bitcoin crash 2011
Bitcoin’s price rise and crash in 2011. Source: 99 Bitcoins

What triggered the price rise?

In June 2011, bitcoin was barely two years old. It began to creep beyond the obscure cryptography forums and into some high-profile tech publications.

New exchanges cropped up, making it easier to purchase bitcoin and the Silk Road dark web marketplace attracted new bitcoin users. 

At the beginning of June 2011, Gawker published its groundbreaking article on Silk Road, drawing enormous attention to bitcoin (arguably for all the wrong reasons). By the end of the month, bitcoin topped out at $30.

And the collapse?

The world’s biggest crypto exchange at the time, Mt. Gox, was hacked, with thieves making off with 2,000 bitcoins. This wasn’t the fatal blow for Mt. Gox (that came later, in 2014). But it was the first in a series of major hacks in the crypto market.

Coupled with the negative publicity around bitcoin and its association with drugs and the Silk Road, a harsh sell-off began.

The bitcoin price fell from $30 in June to $2 in November: a 93% fall in just five months.

It wasn’t until April 2013 (almost two years after the high) that it hit $30 again.

November 2013 Bitcoin Crash

Top price: $1,026

Bottom price: $152 (on Bitstamp exchange)

Percentage fall: 85%

How long to recover? Three years

Bitcoin crash 2014
Bitcoin rise and crash 2013-2014. Source: CoinMarketCap

What triggered the price rise?

In March 2013, the government of Cyprus did something unprecedented. They confiscated the money in people’s bank.

Anyone with more than €100,000 in the bank had a percentage of their funds frozen or turned into shares of the failing bank. It caused outrage. 

To avoid the brutal policy, Cypriots turned to bitcoin.

For the first time, people realized that bitcoin could be a viable alternative to government-controlled fiat currencies. The cryptocurrency began an epic price run.

There was even positive sentiment from governments – the US Senate spoke of the promises of virtual currency and China told its citizens they were free to buy bitcoin.

And the collapse?

Unfortunately, the flurry of excitement about bitcoin overwhelmed the fledgling infrastructure.

The biggest exchanges were slammed with activity and security holes were breached. Mt. Gox was hacked with 744,000 BTC stolen (worth $350 million).

At the same time, China changed its mind on bitcoin, banning financial institutions from trading bitcoin.

The Mt. Gox. scandal and bankruptcy continued through the year. Meanwhile, governments tightened their grip. The bitcoin price bled out for over a year until it finally bottomed at $152 in January 2015 on the Bitstamp exchange.

The bitcoin price didn’t climb back to $1,000 until early 2017, three years after the previous high.

December 2017 Bitcoin Crash

Top price: $19,792

Bottom price: $3,600 (so far)

Percentage drop: 81% (so far)

Time to recover: ?

Bitcoin crash 2018
Bitcoin price rise and crash 2017-2018. Source: CoinMarketCap

What triggered the price rise?

During bitcoin’s three-year “winter,” a whole blockchain industry was being built. Ethereum gained traction as a platform for new crypto projects. Big-name players like IBM began experimenting with blockchain technology. Ripple established itself with some of the biggest banks in the world.

At the same time, ICO-fever gripped the markets – providing a new way to invest in crypto startups.

But the biggest catalyst was the launch of a bitcoin futures market. It offered the first route for institutional investors to trade the bitcoin market. This announcement sent bitcoin flying to $20,000.

And the collapse?

Again, the flurry of activity exposed a lot of problems in the crypto infrastructure. The Bitcoin network couldn’t handle so much activity. Confirmation times took days and it cost up to $50 to make a bitcoin transaction.

The much-hyped bitcoin futures market also allowed people to bet against bitcoin’s price, introducing new short-sellers to the market.

And the ICO hype fizzled out as investors realized many of the projects were useless or outright scams.

What Next?

If history tells us anything, it’s that bitcoin could fall further yet. We’ve seen bigger percentage drops in bitcoin’s short life, and long, dark “winters.”

There is light at the end of the tunnel. Potential catalysts for a price surge include Fidelity’s proposed crypto trading and custody service, the much-hyped Bakkt launch, and the expectation of a bitcoin ETF. 

One thing’s for certain, though, it’s too early to call the “bottom.” A long process of rebuilding lies ahead.

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The crypto markets are in bloodbath mode today. Bitcoin is down 14%, plunging below $5,000 to new yearly lows. Bitcoin Cash has tumbled 43%(!) allowing Stellar to become the fourth-largest cryptocurrency by market capitalization.

Almost every coin is down by double-digit percentages.

Despite numerous analysts claiming that Bitcoin has “bottomed,” it’s clear this bear market is not over.

Some of you will have been here before. After 2013’s bitcoin high of $1,100, we struggled through a long, two-year decline before bottoming out at $220.

But if you’re starting to panic, here are nine possible strategies to navigating this crypto massacre. 

Note: Neither Block Explorer nor the author provides financial or investment advice and this article should not be construed as such.

Bitcoin 24-hour price chart. Source: CoinMarketCap

1. Don’t Try to Time the Market

Whatever you do, don’t try to time the market. Don’t believe anyone that tells you that bitcoin has bottomed. The truth is: no-one knows where the bottom is. Really.

John Bogle, the grandfather of index funds once said: “Sure, it’d be great to get out of stocks at the high and jump back in at the low… [but] in 55 years in the business, I not only have never met anybody who knew how to do it, I’ve never met anybody who had met anybody who knew how to do it.”

If professional investors can’t time the stock market (with its hundred-year patterns and history), you certainly can’t predict the crypto market.

One of the strategies we’ll cover is buying more crypto during the crash, but don’t convince yourself this is the bottom, and be wary of trying to “catch the falling knife.”

As we go through these strategies, always keep this number one rule in mind.

2. Do Nothing (Hodl!)

Hodl is the rallying cry of all bitcoiners who are in the red. The term came from a drunk BitcoinTalk forum user who adamantly claimed he was “hodling” (misspelling the word “holding”) his funds during the 2013 market crash. 

Five years later, that strategy would have paid off. Holding on through the darkest moments and riding out the dips is a classic investment strategy.

However, we are not in a classic market like stocks or commodities. There’s no long-term historical precedent to assume bitcoin will recover. We should also remember that stocks are tied to companies that sell real things to real people. Even in a crash, they carry on business and bring in money. That’s not (always) the case with crypto.

Bitcoin has recovered from price crashes before and hodlers have been rewarded. But beware there is no guarantee Bitcoin will recover to its former glory this time around.

just-hodl-it

3. Cut Your Losses

Sometimes the stress and panic of watching the value of your investments plunge simply isn’t worth it. Every investor takes losses – it’s part of the game and it’s an important learning curve.

I once threw my phone at a wall after cutting a particularly big loss in the forex markets a few years ago. It’s frustrating, but sometimes cutting the loss is the best thing for your mind!

You should never invest more in crypto than you’re willing to lose, so cutting your losses shouldn’t be too painful. If it is, it’s a sign that you’ve put too much money into the market.

Bear in mind that this bear market almost certainly isn’t over yet. Things may get worse before they get better and the losses may accumulate further.

4. Buy More?

As the old saying goes, “buy when there’s blood in the streets.

Every investor is taught to buy when there’s fear in the market and sell when there’s hype. You don’t need me to tell you there’s plenty of fear going around right now.

Traditional investors like Warren Buffet made their fortune by purchasing assets when everyone else was offloading. It takes a high risk appetite to buy into the market when everyone is selling, but it can pay off.

Again, beware that crypto is an entirely new asset class and there’s no guarantee its price will recover.

 

5. Rebalance Your Portfolio 

A market crash is a good time to re-evaluate your portfolio. You suddenly see which coins and projects are the most vulnerable and volatile.

As the hype dies down around crypto, this is when the true winners will emerge. It’s a good time to assess the market in the cold light of day.

6. Look for Strong Opportunities 

If you are reassessing the market, what should you look for? Well, the same thing as always in crypto investing:

The team, the product, and the market they are serving.

The coins and projects that will survive this crash will have a few things in common. They’ll have a dedicated, passionate, experienced team. Look at who’s running the project and the community around them.

Next, look at the product they are creating. Does the coin or project have some type of usability or utility? Does it solve a problem or create a new opportunity?

Finally, who’s the market for this project and is it a viable one? For example, Ripple’s market is the banks, Ethereum’s is developers, Stellar’s is the unbanked.

The crypto hype is over. Only those with real value will survive, so look for that value and future market opportunity.

7. Dollar Cost Averaging

I’ve already warned against trying to time the market. So instead of waiting for the bottom, some investors may choose to “average down” by purchasing a fixed dollar amount of crypto at regular timely intervals – once a week or once a month, for example.

If you buy $100 of crypto every month, for example, you’ll average out the cost of buying. When prices are low, you end up buying more crypto (because $100 buys more coins).

You might not time it perfectly to buy in at the bottom, but you will get a more even average cost rather than purchasing in one lump sum.

It’s an age-old investment strategy that requires discipline. We should also point out that this strategy does not guarantee you won’t lose money (no strategy can do).

8. Learn

Watching any investment go down is difficult. However, you learn a whole lot more when things go down than when they go up!

You learn more about the market, a project’s viability and the strength of its team. You also learn more about yourself – your discipline, your appetite for risk, your mistakes and your successes.

Make sure you take something away from this market crash and apply it to the future. 

9. Don’t Panic

This is easier said than done, but the most important thing is not to panic. Now is the time for fierce discipline and due diligence. Before you make your next decision, take the time to research as much as possible. Try to act with a clear head.

Conclusion

Despite repeated attempts to call the “bottom,” bitcoin continues to find new yearly lows. This is still a relatively new and volatile market and all strategies should take that into account.

To reiterate: Neither Block Explorer nor the author provides financial or investment advice and this article should not be construed as such.

bitcoin etf price

Bitcoin ETFs were all over the news during 2018. 

Many voices called them out as some kind of magical act that would lead the price of Bitcoin to its former glory and maybe even higher than that. 

While an approved ETF could be the catalyst that kicks off a new bitcoin bull run, there is still misunderstanding and misinformation among crypto enthusiasts. 

It’s time to answer some burning questions: what is a bitcoin ETF? What consequences will it have for the future bitcoin price? And, of course, how likely it that a bitcoin ETF is approved in the coming months?

What is an ETF? (A Simple Explanation)

To start with, let’s define an ETF itself.

ETF stands for Exchange-Traded Fund. It’s a fund that tracks and mirrors the price of an underlying asset (like gold, for example). An ETF might also track a basket of assets (like tech stocks).

Shares of an ETF are traded on real stock exchanges and generally do not differ from traditional stocks in terms of trading.

Some of the most popular ETFs include those for gold (GLD) and crude oil (USO).  

The main advantage of an ETF is simplicity and convenience. It is much easier to trade an ETF than it is to purchase gold or bitcoin or oil itself.

what's an etf
Credit: Stocks to Trade

Who Makes and Approves ETFs?

ETFs are created by asset management firms. The firm buys the underlying assets (i.e. bitcoin) and keeps them under custody before creating an ETF.

The US Securities and Exchange Commission (SEC) is responsible for approving an ETF. Once they are approved, investors can buy shares of the ETF from a stock exchange. 

An ETF share represents a certain percentage of the fund, but it does not represent ownership of the underlying asset. If you buy a bitcoin ETF, you are not buying bitcoin itself.

ETFs are popular investments for diversifying portfolios with minor monetary and timely expenditures. 

What is a Bitcoin ETF?

A bitcoin ETF is an investment tool that would track the price of bitcoin. If approved, it would introduce an easy way for investors to get exposure to bitcoin without having to buy or store it directly. Traders would be able to buy and sell shares of the bitcoin ETF on a regulated stock exchange.

Although Bitcoin is already one of the most liquid assets on earth, it still can’t be traded on a regular stock exchange.

As well as the added convenience, investors could buy the bitcoin ETF through their existing, familiar investment account.

bitcoin etf on the stock exchange

Why a Bitcoin ETF Could Lead to “Big Money” Institutional Investors

The most significant benefit of buying ETF shares instead of real bitcoins, apart from its availability on stock markets, is the fact that institutional investors don’t have to store it themselves. 

Therefore, there is no risk of the bitcoins getting stolen. 

Big institutions are currently prohibited from buying bitcoins directly, but an ETF would make their participation in the market a reality.

Regarding that, there are currently two different types of bitcoin ETFs proposed by multiple asset management firms: physical-backed ETFs and futures-backed ETFs.

What is a Physical-Backed Bitcoin ETF?

As you might have already suspected, a physical-backed bitcoin ETF gains its value through actual bitcoins. 

This means an asset management firm needs to buy bitcoins from the market and then store them in their own wallets or custody service. 

Price swings in the ETF should, therefore, be reflected by the price of an actual bitcoin. If bitcoin’s price increases by one percent, the price of a physical-backed ETF should rise by one percent as well.

What is a Futures-Backed ETF?

When trying to set up a futures-backed ETF, the issuing company does not have to buy actual bitcoins, but bitcoin “futures contracts”. Futures are financial instruments that are used to bet on the future price of that asset.

All futures contracts expire on a certain date, although there are different timeframes, e.g. weekly or quarterly. 

Futures traders are confronted with higher risks, but also higher rewards. Regarding the ETF, the issuing company has to update their future contracts every time the contracts expire.

Historic Bitcoin ETF Proposals and Rejections

Although Bitcoin ETFs received a lot of media attention in 2018, there have been dozens of attempts to push one through before. 

Two of the most popular applicants might be the Winklevoss twins, who have supported bitcoin for several years. As CoinDesk investigated in 2017, the brothers submitted their first ETF proposal in mid-2013, with numerous additional proposals in the following years. Unfortunately, the SEC was not satisfied with their offerings so far. 

Winklevoss Twins bitcoin ETF
Credit: Forbes

Besides Cameron and Tyler Winklevoss, many other players are heavily interested in issuing a Bitcoin ETF. As Block Explorer previously reported, the SEC rejected nine applications solely in August this year. This includes multiple proposals for a futures-backed ETF by ProShares, Direxion, and GraniteShares, in collaboration with the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE).

Often referred to as the most promising ETF is a proposal given by a collaboration of the investment firm VanEck, the blockchain company SolidX and the CBOE. 

In this case, the ensemble is proposing a physical-backed ETF. Experts think this particular group has a higher chance of approval, due to their past experience issuing ETFs. 

The date for a decision has already been postponed by the SEC for the second time. While the next date would be on December 29, it is very likely that it will be changed another time. 

What Does the SEC Need to See Before It Approves a Bitcoin ETF?

According to most experts, it probably seems more logical to introduce a physical-backed ETF than a futures-backed one. 

However, from the angle of an asset management firm, it’s actually quite the opposite. Roughly 85% of all Bitcoin ETF applications are futures-backed ETFs. 

A major reason for this trend is, without a doubt, the frequently discussed custody question. Securely storing large amounts of cryptocurrencies has been a great stumbling block for many big players, like exchanges, in the past and present. 

Additionally, bitcoin futures are already a financial instrument open to institutions and have been approved by the SEC before. Consequently, it appears like a smaller step to introduce a futures-backed ETF. 

However, a very critical development the SEC wants to see, before approving an ETF, is a steep reduction of market manipulation and fraud attempts.

When rejecting nine ETF proposals in August, the SEC stated that 

SEC“…the Commission is disapproving this proposed rule change because, as discussed below, the Exchange 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 the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

 

Further reading: Bitcoin ETFs: Why Do They Keep Getting Rejected?

Bitcoin ETF Quotes and Predictions

Since ETFs are one of the hottest topics this year, there have been several voices expressing their opinions, about if and when an ETF could be on the cards.

For example, FIC Network Founder Arturs Ivanovs told Finance Magnates that:

“Volume from institutional investors would facilitate a significant regulated market that would reduce the scale of price manipulation thereby easing the SEC’s concerns. An ETF would also open up the market to more retail investors.” 

 

After being asked for a date, Ivanovs said, “2020 is my prediction.”

Income Locker CEO Csaba Csabai thinks that there might be other hurdles that need to be cleared. “There is still technological development needed to make Bitcoin exchange-tradable because when buying an ETF, someone has to actually purchase bitcoins,” he said in a conversation with Finance Magnates. Nevertheless, Csabai also sees a silver lining, as he went on with “if the rate of adoption continues to grow at the current pace, we will soon see an ETF, because it’s the only way institutions can access this asset class, so solving it as soon as possible is in their best interest.”

In an interview with ETF.com, Spencer Bogart, Needham & Co vice president of equity research said:

spencer bogart bitcoin etf quote“We have pegged the odds at less than 25 percent. That is because the very first thing the SEC lists in its own mission statement is protecting the investing public. When you think about the game theory aspect of this, if I work at the SEC and I approve this ETF. and it goes well, nobody is probably going to come around and pat me on the back and give me a promotion. But if I approve it and a lot of money flows into it, and something goes wrong, I am likely to lose my job.”

 

However, there are also parties that don’t believe in a Bitcoin ETF at all. Nouriel “Dr. Doom” Roubini believes that the crypto space has several issues, like fraud and manipulation, that will make an ETF not feasible in the near future. In a debate at CoinTelegraph’s BlockShow, Nouriel recently stated that “The academic evidence is, that this market is totally manipulated.” He later continued, “How do you expect anybody, who is an institutional investor, who has to be compliant with the rules and regulation, KYC/AML, to enter the space.” 

Could an ETF Influence Bitcoin’s Price?

To answer this question, one clearly needs to distinguish between a futures-backed and a physical-backed ETF. As already elaborated in the beginning, to create a physical-backed ETF the issuing firm needs to buy bitcoin from the market.

Although those deals wouldn’t be made on a regular crypto exchange, it would inevitably have an effect on bitcoin’s price, due to the immense amounts of bitcoin that would be needed for an ETF. 

In addition, an approved ETF would attract countless speculators, who would probably buy bitcoin right away.  So yes, a physical-backed ETF would, with almost full certainty, have a great impact on the price of bitcoin. 

In regard to a futures-backed ETF, the impact might not be as big as with the physical one. The issuer would only need to buy futures contracts, hence the price wouldn’t be directly affected. 

Futures would most probably help to spread adoption in institutional circles, but this would only be valid in the long term. In the worst case, it could even have a negative impact on bitcoin, as the past has already shown when bitcoin futures were introduced for the first time. 

Still, we can’t be sure about the impact before an ETF has even been officially approved.

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