To the surprise of no one, the SEC has once again rejected a bitcoin exchange-traded fund (ETF) proposal. This ETF was proposed by Bitwise. But unlike the last rejections, in this one the SEC cited specific, addressable issues.
From CoinDesk’s reporting:
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The SEC suggested that a surveillance-sharing agreement between a regulated exchange and a bitcoin market of “significant” size might help allay its unease.
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Bitwise and others see this as an opening. Some experts remain unconvinced…
Legal experts said the decision suggests that a bitcoin ETF may still be years away. But Matt Hougan, Bitwise’s global head of research, sees positives in the decision. The SEC has at least shown it’s willing to raise addressable concerns, rather than rejecting a product out-of-hand with little explanation.
“A bad outcome would have been a cursory [filing],” Hougan told CoinDesk, adding:
“After digesting it a little bit, we’re pleased with the detail the staff provided and the clarity of what we have to do.”
I agree with Bitwise here. It’s significant that the SEC had specific objections in its ruling. And this time, it has actually hinted that if Bitwise can get a surveillance-sharing agreement with a regulated exchange, the ETF could get further consideration.
The SEC can probably delay bitcoin ETFs for a few more years. But it can’t delay them forever. And this time around, at least, it’s not all bad news.
Regardless, bitcoin doesn’t need an ETF to reach new highs. I remain convinced that we’ll see bitcoin over $20,000 by next summer. Fidelity Digital Assets and Bakkt are now providing an “on-ramp” for institutional money to come into crypto easily. So we don’t really need ETFs. They would just be a cherry on top.
As you all know by now, the most important catalyst we’re watching is the bitcoin halving. The halving occurs in May and should be extremely bullish for prices.
As I noted in my Early Investing article this week, the past halvings (in 2012 and 2016) were extreme catalysts.
At the time of the first halving in 2012, bitcoin was trading around $15. It would reach a high for that cycle of $270 just 135 days later, as noted by Rekt Capital.
The second halving occurred in July 2016. And as CCN reports, bitcoin prices went from $268 in July 2016 to $2,525 a year later.
Interestingly, there was a pullback of around 40% to 44% before each prior halving. That’s exactly what we’re seeing now: a 44% pullback from recent highs of $13,000.
I’m trying to not get my hopes up too much. But if bitcoin behaves like it did after the first two halvings, we could see $100,000 bitcoin in the very near future.
One blogger I read regularly, Rekt Capital, has some very interesting notes about the effect the halving could have on prices.
1. Bitcoin has rallied 12,000%-13,300% in each of its Halvings to date
The first Bitcoin Halving spurred 13,378% growth in Bitcoin’s price whereas the second Bitcoin Halving spurred a 12,160% rally.
A 12,160% rally from Bitcoin’s mid-December 2018 bear market bottom of $3,150 would result in a ~$385,000 Bitcoin.
By the same token a 13,378% rally would lead to a ~$425,000 Bitcoin.
A $385,000 Bitcoin is very interesting because that would mean that Bitcoin’s Market Cap (i.e. $189 billion as of this writing) will have eclipsed the current Market Cap of Gold (i.e. $7.8 trillion).
I doubt we’ll see the same percentage increases that occurred during the first two halvings. But if we even see one-fourth of the gains from previous halvings, we’re looking at around a 10X increase in the bitcoin price.
So please, don’t let the latest pullback scare you out of the market. Hold strong. I suspect we will all be richly rewarded a year from now.