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» Spot bitcoin ETFs trade based on the price


SPOT BITCOIN ETFS TRADE BASED ON THE PRICE –
HTTPS://ELOUISE.COOKPAD-BLOG.JP/ARTICLES/732127

As governments worldwide continue to eye the crypto industry, some digital asset
managers are pushing back against regulators in an effort to provide more legal
investing opportunities.

The U.S. Securities and Exchange Commission on Wednesday rejected Grayscale
Investments’ application to convert its bitcoin trust (GBTC) into an
exchange-traded fund (ETF). Shortly thereafter, the firm — one of the largest
digital asset managers, with around $20 billion in assets under management —
filed a lawsuit against the SEC.

The SEC also denied Bitwise Asset Management’s application for a spot bitcoin
ETF that day.

The SEC’s decisions aren’t a first for the industry; the government agency has
denied over a dozen bitcoin spot ETFs in the past year alone while approving
several bitcoin future-based ETFs.

The SEC rejected bitcoin spot ETFs again. Now what?

“Spot bitcoin ETFs trade based on the price of bitcoin itself, while
futures-based ETFs trade based on the price of CME’s bitcoin futures product,
which in turn is tied to an index,” Ken Goodwin, director of regulatory and
institutional affairs at Blockchain Intelligence Group, told TechCrunch.
“Bitcoin ETFs proponents argue that the futures markets are still based on the
underlying spot bitcoin price, while the SEC notes that CME’s futures market is
regulated by the [Commodity Futures Trading Commission].”

The SEC allows traders to bet on the value of bitcoin through CME’s bitcoin
futures contract, a U.S. dollar cash-settled contract that serves as a
once-a-day reference rate of the value of bitcoin in U.S. dollars, according to
global markets company CME Group.

Craig Salm, chief legal officer at Grayscale, said on a Twitter Spaces that the
SEC once denied both futures and spot bitcoin ETFs, at least “treating them
fairly.”

But that was in 2017.

More recently, the SEC has continued to approve both long and short exposure
bitcoin futures ETFs while denying spot bitcoin ETFs from coming to the market,
Michael Sonnenshein, CEO at Grayscale Investments, said to TechCrunch. “That
disparate treatment is in fact one of the most important arguments underpinning
our lawsuit.”

Since the defendant of the case is a regulator, it will go to an appellate court
and a decision should be finalized within nine to 12 months, Sonnenshein told
Reuters.

The SEC’s rejection cites concerns about market manipulation and the lack of a
surveillance-sharing agreement between a “regulated market of significant size”
and a regulated exchange, Goodwin said. “This echoes concerns that the regulator
has expressed for years in terms of rejecting other bitcoin ETF applications.”

GBTC holds 3.5% of all bitcoin in circulation, and its shares are the largest
and most liquid publicly traded crypto exchange-traded products, Ryan Selkis,
founder and CEO of Messari, wrote in a report. “Grayscale products are like
ETFs, but not actually ETFs,” Selkis wrote.

Bitcoin Drops to End Worst Quarter Since 2011, When It Was $1. What Comes Next.

Bitcoin and other cryptocurrencies were tumbling, again. The digital asset space
was on track Thursday to close out one of its worst quarters on record—and there
are few signs that the pain is over.

The price of Bitcoin dropped 5% over the past 24 hours, plunging through the key
$20,000 level and wavering around $19,000. The largest crypto continues to trade
at less than one-third its all-time high near $69,000, reached in November 2021,
but has held above recent lows of around $17,800, following a selloff in
mid-June.

Ether, the Etherum network token and second largest crypto, was down 8% to just
above $1,000, far below its all-time high last November near $4,900. Smaller
tokens including Solana, Cardano, Dogecoin, and Shiba Inu showed much of the
same.

It has been a painful eight months for digital assets. The total market
capitalization of the space has plunged to $850 billion from heights of nearly
$3 trillion, with much of the most severe declines coming in recent weeks and
months. Bitcoin is on track to close out its worst quarter since late 2011—a
year in which it breached the $1 mark for the first time—while Ether is sliding
into the end of its worst quarter on record.

“The crypto freefall could continue because of the system’s complexity.
Stabilising token prices is hard because there are no common valuation models
like those within the public equity system,” wrote Marion Laboure, a Harvard
University lecturer and senior economist at Deutsche Bank , in a report on
Wednesday.

“The value of a Bitcoin will continue to rise and fall depending on what people
believe it is worth.”

Some of the digital asset rout can be blamed on cracks in crypto itself—the
meltdown of stablecoin Terra, breakdowns in the digital asset lending space, and
the bust of a major hedge fund threatening wider contagion—but not all.

As a new asset class, Bitcoin and its peers should, in theory, trade
independently of mainstream finance. In reality, they have shown to be
correlated to other risk-sensitive assets, like stocks and especially tech
stocks. And stocks are in a bear market, with the S&P 500 down more than 20%
this year and the tech-heavy Nasdaq almost 30% in the red.

Fears over how the Federal Reserve’s policy of aggressive interest rate hikes
could cause a recession have driven these declines — an environment that would
be unkind to risky bets like Bitcoin.

“High inflation, monetary tightening, and slow economic growth will likely put
additional downward pressure on the crypto ecosystem,” wrote Laboure in the
Deutsche Bank report.

So what happens next as digital assets head into the latest “crypto winter”—a
bear market characterized by a collapse in prices, drought of venture capital
investment, and widespread job losses?

There are compelling, and upbeat, reasons to believe this crypto winter is
different than others. Meanwhile, prices are down and investors are feeling the
pain. But Laboure believes there is potential for a substantial rally in the
months ahead.

“Using S&P 500 stocks as a reference, we estimated what Bitcoin’s price might be
at the end of 2022, while considering the effect of higher interest rates,”
wrote Laboure, detailing the bank’s view that the S&P 500 will close out 2022 at
4,750 points, up from a close of 3,818 on Wednesday.

“We concluded that Bitcoin could end the year with a price of approximately
$27,000,” wrote the Deutsche Bank economist.

A move to $27,000 may seem like a deliverance to investors—a 40%-plus rally from
current prices—but it would still bring Bitcoin to less than half its all-time
high and a level at which many holders remain underwater. A much hotter rally
would be needed to deliver Bitcoin out of winter and into a crypto spring.

The recent Bitcoin rally was extremely short lived, with the largest
cryptocurrency retracing back to the $19,000 level

Bitcoin Briefly Reclaims $20,000 Before Paring Gains

Bitcoin, the top cryptocurrency, managed to reclaim the $20,000 level at 00:29
a.m. UTC on the Bitstamp exchange.

The flagship coin managed to soar more than 9% within the span of 48 minutes,
staging a surprising recovery.

The sudden rally, however, ended up being a flash in the pan, with Bitcoin
erasing virtually all of its gains in the following hours.

The crypto king is changing hands at $19,318 on the Bitstamp exchange.

The market capitalization of the world’s largest cryptocurrency is currently
sitting at $370 million.

The world’s largest cryptocurrency lost roughly 54% of its value in the second
quarter of 2022. This has marked the cryptocurrency’s worst quarter in 11 years.
For comparison, Bitcoin declined about 50% during the first quarter of 2018.

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