Bitcoin is about to explode,” according to a tweet by CNBC cryptocurrency analyst and host Ran Neuner. He points to the upcoming bitcoin ETF decisions which he thinks will act as a catalyst for a new bull run. But how accurate is this prediction?

“I just bought Bitcoin for my parents. It’s too obvious that it’s about to explode…” That was the tweet from CNBC’s Ran Neuner this week.

Expanding on the statement, he said that bitcoin exchange-traded funds (ETF) will trigger the upcoming price rise:

Ran Neuner tweet bitcoin will explode

So what exactly does this mean?

Bitcoin “Futures” Triggered the 2017 Price Explosion

As Neuner writes, last year’s bitcoin price explosion was triggered by the launch of a bitcoin futures market.

The futures market allows traders to bet on the future price of bitcoin (without actually buying bitcoin itself). It was a new way of funneling big investors towards the crypto market.

And it worked. The speculation (and subsequent launch) of bitcoin futures sent bitcoin to an all-time high of $20,000.

“An ETF Is a Way Bigger Deal” Than Bitcoin Futures

Ran Neuner is absolutely correct about that.

Like the futures market, an ETF is a simple way for investors to put money into bitcoin, without buying the cryptocurrency itself.

ETFs track the price of an underlying asset, in this case, bitcoin. They trade on a public stock exchange, making it easy to buy and sell.

Crucially, ETFs are cheaper and more accessible than futures contracts. They are a phenomenally popular investment tool, making up a huge portion of institutional portfolios.

what's an ETF infographic
Credit: Stocks to Trade

The financial world has increasingly shifted towards ETFs instead of futures across the board. Pictet’s investment manager, Shaniel Ramjee explains:

“[Our] ETF usage has gone up, mostly because the cost has come down and the variety of ETFs has increased.”

ETFs are among the most widely used investment tool on the planet.

So a bitcoin ETF would allow mainstream investors and institutions to add bitcoin to their portfolios with less risk and hassle.

There’s a strong argument that “big money” would flow into bitcoin should an ETF become commercially available.

Do Bitcoin ETFs “Require Actual Purchase of BTC”?

Neuner’s second point is that bitcoin ETFs require the actual purchase of BTC, whereas futures do not.

The implication being that an ETF will directly push money into the cryptocurrency market rather than simply track its movements.

This is half-true.

Only some bitcoin ETF proposals are based on physical bitcoin. The recently rejected Van Eck ETF, for example, was a physical bitcoin product. It means Van Eck would physically buy bitcoin before pooling it to create an ETF.

Other proposals were “futures-backed.” In other words, the banks would not buy bitcoin itself. Instead, they would buy futures contracts to back the ETF.

It’s true that a physical bitcoin ETF is more likely to gain approval than a futures-based product. The Securities and Exchange Commission (SEC) has hinted that the futures market is not large or mature enough to support an ETF.

However, if and when a bitcoin ETF is approved, it remains to be seen whether it will involve the physical purchase of bitcoin.

Bitcoin ETF Deadlines Loom

The SEC has set a new deadline of October 26th for comments on nine ETFs. These ETFs were each rejected back in September. However, the SEC has changed the rules, allowing for public comments of support or opposition.

It suggests the SEC is taking these proposals seriously. But don’t take it as a hint that an ETF approval is pending.

Regulation Stands in the Way

Unfortunately, the US Securities and Exchange Commission (SEC) keeps rejecting ETF proposals.

It’s important to note that the rejections have nothing to do with bitcoin itself. instead, the SEC has an issue with:

  1. Small market size.
  2. Manipulation and fraud.
  3. High volume outside the US.

ETF Approval More Likely in 2019

Since very little has changed since the September rejections, don’t expect a miracle. The SEC is unlikely to reverse the decision in the near future.

Most in the industry expect an ETF approval in 2019 at the earliest. Ran Neuner predicts “before end Feb.”

Promising developments like Gemini’s new insurance and custodial services may take us one step closer, but this is a long game.

Will ETF Approval Trigger a Price Explosion (or Collapse)?

ETFs are coming. It may be weeks, months, or years away, but the stepping stones are in place. The approval will likely attract a new wave of “big money” to the cryptocurrency market.

However, let’s not forget what happened after bitcoin futures were finally introduced.

The market crashed.

That’s partly because bitcoin futures contracts also allowed traders to bet against bitcoin.

ETFs will allow a similar function. Traders will be able to “short” bitcoin ETFs, potentially sending the price down again.

One thing’s for sure. A bitcoin ETF will funnel enormous sums of money into the cryptocurrency market. It may trigger the next bull run, but it will also increase selling pressure.

Something to bear in mind as we edge closer to SEC approval and institutional involvement.

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woman with bitcoins over her eyes

Welcome to your daily Block Explorer roundup. Crypto prices are back in the green after taking a beating yesterday. Here’s everything you need to know:

Bitcoin is regaining its composure after the rejection of nine bitcoin exchange-traded funds (ETFs). As expected, the crypto market initially crumpled on the news, but bitcoin is now holding above the crucial $6,500 mark.

1. Bitcoin – $6,545 (+ 1.6%)
2. Ethererum – $276 (+ 0.8%)
3. XRP – $0.33 (+ 0.6%)

What’s behind today’s stability? Controversially, the Securities and Exchange Commission (SEC) is taking a second look at Wednesday’s ETF decision.

SEC Commissioner, Hester Peirce said the decision was initially delegated to staffers, but senior officials will now review the rejections themselves.

SEC commissioner Hester Peirce tweet about bitcoin etf

We’re still unlikely to see an approval, but it means the SEC is taking these proposals seriously.

Biggest winner and loser in the top 20

tron logo on black background

Biggest winner – TRON (+5%)
Biggest loserDash (- 14%)

TRON is flying high in the top 20 today thanks to its addition to the CoinPayments platform. That means 2.2 million buyers and sellers can now use TRON as a payment option.

China cracks down on crypto (again)

The Beijing district of Chaoyang has officially banned all cryptocurrency promotional events. Shopping malls, event halls, and public spaces are now off-limits for crypto events and material.

What are their reasons? The authorities cited “prevention of money laundering” and “security and stability of the financial system.”

This comes less than a week after Chinese social media, WeChat, reportedly blocked cryptocurrency and blockchain accounts on its platform. China is also moving to stop overseas exchanges from selling in China.

The news helped to push the market into the red yesterday, but traders have mostly shrugged it off.

Ripple fires up xRapid

ripple logo on blue background

xRapid is Ripple’s silver bullet. It’s a service that instantly converts currencies around the world in the blink of an eye (with low fees). Crucially, for XRP holders, it uses the XRP token to make the exchange.

Let’s say you want to exchange Japanese yen to Mexican pesos. The yen is converted to XRP (through the xRapid system). XRP is then converted to pesos. Ripple says it’s 40-70% cheaper than the current system and takes seconds rather than days.

To make it happen, Ripple has announced a partnership with Bittrex – a US crypto exchange – to facilitate the exchange of US dollars. Ripple has also partnered with Bitso in Mexico and Coins.ph in the Philippines to power the exchange to Mexican and Philippine pesos respectively.

We’re still a long way from seeing xRapid deployed within the banking system, but Ripple is slowly building the architecture behind the scenes.

That’s all for today’s roundup. We’ll see you back here tomorrow for more.

Today’s further reading: What is Ripple? The Bankers’ Network

Before you go… are you a trader or a HODLer?

We’re working to bring you an all-new Block Explorer, and we’d like your help. Please take a few minutes to let us know how you use crypto and how we can make Block Explorer better.

Take our 3-minute survey here.

man checking bitcoin price on a laptop and phone

Welcome back to your daily Block Explorer crypto roundup. Today’s focus is Bitcoin ETFs and why the SEC keeps knocking them back.

The Securities and Exchange Commission (SEC) rejected yet another bitcoin exchange-traded fund (ETF) proposal on Wednesday. In fact, it shut down nine proposals at once.

As Block Explorer News previously reported, the SEC faced a deadline on the ProShares Bitcoin ETF which it could no longer push back.

Nine bitcoin ETF rejections in 24 hours

In addition to the two ProShares applications, the SEC rejected two proposals from GraniteShares and five from Direxion.

Earlier this month, the US regulator delayed its decision on a VanEck and Solid X ETF. Before that, they denied a bitcoin ETF proposal from Tyler and Cameron Winklevoss (for the second time).

So what exactly is going on? Why is the SEC pushing back so hard?

It has nothing to do with bitcoin itself

Throughout its many rejections, the SEC has been quick to point out that it has nothing to do with bitcoin’s functionality:

“[The agency] emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”

Problem 1: market size

Most of the bitcoin ETF proposals (except the VanECK ETF) track the bitcoin futures market, not bitcoin itself. The SEC says that’s a problem because the bitcoin futures market is too small:

“Among other things, the Exchange has offered no record evidence to demonstrate that bitcoin futures markets are ‘markets of significant size.’”

Bitcoin futures were only introduced in December 2017, so the market has not yet grown to the size of other mature markets. (It has only 2.5% the volume of the silver futures market, for example).

Problem 2: manipulation and fraud

Ultimately, this is the SEC’s biggest concern. The ETFs were rejected because they did not meet the Exchange Act requirements, in particular:

“The requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

Price manipulation remains an underlying issue for the SEC.

Problem 3: bitcoin volume outside the US

Three-quarters of bitcoin trade activity takes place outside the US. That makes it difficult for the SEC to ensure “significant investor protection.”

Problem 4: wild swings on exchanges

Although this wasn’t addressed directly by the SEC, it has been suggested that an ETF is more likely to be accepted if crypto exchanges worked together. Some offer wildly different prices for the same asset while keeping true market data behind closed doors. The SEC is likely to want more transparency before approving an ETF.

Is there any hope for a bitcoin ETF?

The SEC hit a slightly more optimistic tone in the latest round of rejections. It hinted that a bitcoin ETF might provide a safer method for entering the market, compared to buying the asset itself:

“The Commission acknowledges that, compared to trading in unregulated bitcoin spot markets, trading a bitcoin-based ETP on a national securities exchange may provide some additional protection to investors, but the Commission must consider this potential benefit in the broader context of whether the proposal meets each of the applicable requirements of the Exchange Act,”

Bitcoin prices drop in response

After the Winklevoss rejection and the VanEck delay, the price of bitcoin collapsed. It seems today, however, traders are more realistic, having priced in the high likelihood of rejection. Bitcoin is down 3.5%, but it’s a far cry from the steep drops we saw after previous rulings.

1. Bitcoin – $6,459 (- 3.5%)
2. Ethereum – $274 (- 4.5%)
3. XRP – $0.32 (- 5%)

Biggest winner and loser in the top 20

Litecoin logo

Biggest winnerLitecoin (- 2.48%)
Biggest loser – IOTA (- 8.5%)

Although they’re both in the red, litecoin and bitcoin are proving strongest in the market today. In volatile moments, traders are likely to stick to the “safe” crypto havens.

That’s all for today’s roundup. We’ll be back tomorrow with more updates from the world of crypto and blockchain.

Before you go… are you a trader or a HODLer?

We’re working to bring you an all-new Block Explorer, and we’d like your help. Please take a few minutes to let us know how you use crypto and how we can make Block Explorer better.

Take our 3-minute survey here.

New York financial district SEC

Welcome back to your daily Block Explorer crypto roundup. Today we’ll dive into the upcoming bitcoin ETF decision. First, let’s take a look at the market overview:

Bitcoin finally cracked $6,500 in a blistering overnight session on Wednesday. The total crypto market capitalization jumped $12 million in an hour with Bitcoin up more than 4%.

1. Bitcoin – $6,680 (+ 4%)
2. Ethereum – $285 (+ 1.1%)
3. XRP – $0.34 (+ 2.3%)

The rise across the crypto market appears to coincide with BitMEX (a crypto trading platform) shutting down for maintenance.

Why did that impact the price? BitMEX allows traders to bet against crypto prices. When trading was halted, anyone betting against bitcoin (with a ‘short position’) had their trades liquidated, which forced the price up.

Biggest winner and loser in the top 20

vechain logo

Biggest winner – Vechain (+ 10%)
Biggest loser – NEM (- 0.83%)

Tomorrow’s ETF decision: what do you need to know?

Despite last night’s jump in prices, the crypto market has been in pause-mode lately. We’re waiting for the SEC (Securities and Exchange Commission) to make a decision on another Bitcoin ETF.

What’s an ETF?

An ETF is an ‘exchange traded fund.’ It tracks the underlying price of a commodity (like gold), an index (like the S&P 500) or a basket of stocks.

ETFs makes it much easier for the average investor to put money into the market.

A bunch of companies are now trying to introduce the first bitcoin ETF. First, the Winklevoss twins had their ETF rejected by the SEC in July.

Then, a second ETF proposal from VanEck and Solid X – which was considered more likely to get approval – was delayed until the end of September.

Price crash

In both cases, the SEC decisions triggered huge losses on the crypto market. A bitcoin ETF is widely seen as a catalyst for “institutional money” to flood into crypto, so a rejection is a set back.

Thursday’s Bitcoin ETF decision

Tomorrow, the SEC will make a decision on the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF. This time the SEC cannot delay or push back the ruling. We’ll see a decision, whether it’s yes or no.

What will happen?

The most likely outcome is another rejection. The SEC continues to push back against bitcoin ETFs, citing volatility and lack of regulation.

It’s also worth noting that the ProShares ETF is based on Bitcoin ‘futures’, whereas the more promising VanEck ETF is based on physical bitcoin.

It’s a small but important distinction. Futures are contracts in which traders agree to buy or sell bitcoin on a certain date. The physical bitcoin ETF is rooted in bitcoin’s live price.

Check back in 2019…

Most experts don’t think we’ll see a bitcoin ETF until 2019, but tomorrow’s decision could still surprise us. A Bitcoin ETF is coming. It’s just a case of when.

We’ll update you with the outcome when we hear more. That’s all for today’s roundup. See you back here tomorrow.

Today’s further reading: SEC Rejects Winklevoss Bitcoin ETF, Here’s Why it Doesn’t Matter.

Before you go… are you a trader or a HODLer?

We’re working to bring you an all-new Block Explorer, and we’d like your help. Please take a few minutes to let us know how you use crypto and how we can make Block Explorer better.

Take our 3-minute survey here.

Motivations for a Bitcoin ETF

As Bitcoin matures into a viable asset class investors demand easier ways to join the burgeoning market. Apart from retail interest, institutions have billions of dollars on the sidelines patiently waiting to enter the market.

The S-1 filing describes shares of the ETF to be “Easily Accessible and Cost Efficient.”  The Winklevoss Bitcoin Trust will allow investors to avoid the process of purchasing bitcoins on exchanges and having to handle security and storage. Shares would trade just like stocks, allowing mainstream investors to enter the market through an existing broker easily.

SEC Ruling: Winklevoss’ ETF Denied

Recently, the SEC denied The Winklevoss’ Bats BZX Exchange, Inc. (BZX) second ETF proposal. The Commission was careful to emphasize that the decision denying a Bitcoin ETF does not rest on evaluating whether or not bitcoin has inherent value.

Manipulation Still a Primary Concern

The SEC has yet to approve a digital currency-based ETF. In the latest decision, the SEC noted that more than 75% of the volume of bitcoin trading occurs outside the U.S., with only 5% of trading taking place on U.S. exchanges. Many overseas exchanges are unregulated, making markets susceptible to illegal market manipulation strategies such as wash trading.

SEC Commissioner Dissents

According to Commissioner Hester Peirce, the disapproval order focuses on the characteristics of the spot market for bitcoin, rather than on the ability of BZX to surveil trading of and to deter manipulation in their listed shares. Peirce noted if the disapproval order’s rigorous standard were applied consistently, many commodity-based ETFs would not pass.

Approval of this order would demonstrate the SEC’s commitment to acting within the scope of their limited role in regulating the securities markets. The disapproval denies investors from accessing Bitcoin through a predictable, transparent, and simplified product.

 100% Chance of a Bitcoin ETF

 The Winklevoss twins aren’t alone in the Bitcoin ETF space. On July 24th, the SEC delayed its decision on a separate Bitcoin ETF application from investment firm Direxion. Bitwise also filed its own application that would track an index of ten cryptocurrencies.

Jan van Eck, CEO of VanEck Associates is 100% certain the SEC will pass a Bitcoin ETF in the long run. The VanEck, Cboe, and SolidX partnership currently awaits SEC ruling on their proposed Bitcoin ETF. VanEck is hopeful of gaining approval addressing the SEC’s concerns here. Mark your calendars — the ruling is expected to occur between August 10th and 16th.

Conclusion

The disapproval order unintentionally undermines investor protection, precluding investors from benefiting from the increased institutional discipline that comes with approval. Bitcoin markets are steadily maturing, and mainstream finance is knocking at the door. Mass adoption is so close yet so far.