With Halloween looming this month, cryptocurrency investors could be in for a treat as the Securities and Exchange Commission (SEC) set Friday, Oct. 26, 2018 as the deadline for public comments on nine applications from various issuers looking to launch bitcoin exchange-traded funds (ETFs). However, they could also be in for a trick as nine have tried and nine have failed with respect to bringing in a cryptocurrency-related ETF to the capital markets, but is the latest SEC invitation a sign that the chances are now better than expected?
According to an article in Forbes, ” investor focus over recent months has shifted to the possibility of a Bitcoin ETF being approved by the SEC–something that will boost mainstream adoption of the cryptocurrency at a much more rapid pace than full-fledged trading support by investment banks. Although there has been little news on this front over recent weeks, the SEC’s recent decision to invite comments from investors supporting or opposing Bitcoin ETFs should renew interest in the industry over coming months.”
Earlier this year, the SEC’s Division of Trading and Markets rejected applications from investment firms ProShares, Direxion and GraniteShares, but the latest decision by the SEC to invite more comments could be a positive sign that the SEC is willing to look at the data more closely as opposed to making a snap decision. Like a referee overturning a challenged call in professional sports, the SEC appears to be taking their time in the replay booth–a possible signal that the call could go in favor of cryptocurrency-related ETFs when that time arrives.
Getting to the Bottom of Things
As of 2:00 p.m. ET, Bitcoin’s price currently stands at $6,649.95, and according to some Bitcoin analysts, the leading cryptocurrency may have already reached a bottom. Since it hit $20,000 late last year, the price of Bitcoin has fallen as much as 70%, but the unceremonious fall from grace could be over.
“We’re down about 70 percent from our highs, so I think that bitcoin is close to bottoming and so is the rest of the market,” said Blockchain Capital’s Spencer Bogart said Friday on CNBC’s “Fast Money.”
A spate of news regarding institutional investor interest from capital giants, such as BlackRock and Morgan Stanley have helped buoy the price of Bitcoin over the summer, but its price has recently stabilized to a level of $6,500.
Related: The Key to The First Bitcoin ETF
Yale Betting Big on Crypto
Yale University’s Chief Investment Officer David Swensen, dubbed the ‘Warren Buffet’ of the school’s endowment fund, apparently has a predilection for making smart investments that earned him his moniker, and now Swensen is placing bets on two venture funds dedicated to digital currencies, per a report.
With $29.4 billion under his management, it’s safe to say that Swensen has faith in these cryptocurrency funds, giving Bitcoin and its peers a much-needed vote of confidence. Swensen’s investment team has already allocated capital towards Andreessen Horowitz’s inaugural $300 million crypto fund, but it closed early this summer.
Other forays by Swensen into the cryptocurrency space include an investment in Paradigm, a blockchain and cryptocurrency-focused fund that was started by Coinbase co-founder Fred Ehrsam in conjunction with former Sequoia Capital partner Matt Huang.
Swensen’s investing prowess is the stuff of legends, dating back to 1985 when Yale’s endowment fund was a paltry $1 billion compared to its current size. Per CNBC, “Yale’s endowment returned an annualized 7.4 percent in the past decade and 11.8 percent over 20 years, according to its annual report. The fund gained 12.3 percent from June 2017 through June 2018, the university announced this week. Harvard University, with a $39.2 billion endowment, posted a 10 percent gain.”
Bitcoin ETF in 2019 if not 2018?
In a recent Bloomberg “Trillions” podcast, managing director of ETF.com; Tom Lydon, ETF Trends publisher; and Todd Rosenbluth, director of ETF and mutual fund research at CFRA discussed topics in a roundtable discussion that included cryptocurrencies. They were asked whether a cryptocurrency-related ETF would finally make it to the capital markets.
“No,” said Rosenbluth. “The SEC has concerns about it. There isn’t the data to back up that this can be handled in a way without fraud–it’s a hard thing to overcome proving that.”
“SEC is looking at it for sure; they’re trying to get their arms around it,” said Lydon. “It will happen by the end of 2019.”
“I think futures-based products is where this is going to happen,” said Nadig. “It’s really hard for the SEC to say you can invest in oil futures and natural gas futures, but you can’t invest in crypto futures, they settle the same way, they trade the same way. I think it’s just a matter of time and the time is 2019.”
For more information on the cryptocurrency market, visit the Bitcoin category.