Earlier this year, Bitcoin bull Mike Novogratz said that “a herd of institutional investors” was headed straight for the cryptosphere. He was right. A growing number of banks and other financial institutions have shown public interest in the blockchain space.
However, the cryptosphere has received a series of harsh blows from the United States SEC in the form of rejected applications for Bitcoin ETFs (exchange traded funds.)
Indeed, the possibility of a Bitcoin ETF has stirred quite a bit of hope for the future of Bitcoin and the cryptocurrency markets. In the weeks preceding the decision to deny the Bitcoin ETF application submitted by Gemini creators Tyler and Cameron Winklevoss, the price of Bitcoin rallied from roughly $6000 to over $8300. However, the rejection sent the price hurtling back down around $6000.
I just published “The Bitcoin ETF: breaking down the CBOE ETF proposal”. Particularly relevant given today’s SEC announcement. This ETF is the single most important short-term factor influencing bitcoin’s price. #Bitcoin #ETF #SEC https://t.co/Euv6yqJtVv
— Alex Krüger ?? (@Crypto_Macro) August 7, 2018
The Winklevoss application wasn’t the only one to be rejected–the same day, 8 other Bitcoin ETF applications were also denied by the SEC. Now, the Commission is expected to deliver decisions about three additional applications for Bitcoin ETFs by the end of this month; even more companies, including Coinbase, are developing application for crypto and Bitcoin ETFs of their own.
While it’s impossible to know what the future will hold, the effects that the series of rejections have had on Bitcoin and the cryptocurrency markets at large are fairly clear.
What Do the Rejections of Bitcoin ETFs Mean for the Cryptocurrency Markets?
Bitcoin’s roller-coastering valuation in relation to the Bitcoin ETF applications has been (more-or-less) directly correlated. As anticipation builds, the price of Bitcoin goes up; the SEC denies applications, and the price abruptly crashes.
The reasons behind these short-term rallies and crashes have far more implications for the future of the Bitcoin network than it may seem on the surface. The reason that Bitcoin rallies when a decision is close on the horizon is because hopeful hodlers believe that an approval is in the cards–and an approval could mean an influx of institutional cash.
#bitcoin breached 8k. Is ETFs approval by the SEC fueling its demand as it did back in 2016?
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The SEC is asking for the public opinion regarding ETF decision and has received 10X the number of responses VS this past April.
What does August hold for Bitcoin? pic.twitter.com/4i587O3neE
— eToro (@eToro) July 24, 2018
While some analysts believe that an approval could be close on the horizon, others believe that years could pass before a Bitcoin ETF arrives on the scene. “2020 is my prediction,” FIC Network founder Artur Ivanovs told Finance Magnates.
So for all of the institutional investors who are looking for ways to enter into the cryptocurrency markets–if a crypto ETF isn’t a part of the near future, what then?
Companies Offer Alternative Products to Institutional Investors
A growing number of firms are launching investment products geared toward institutional investors. Some of the most promising products for institutional investors have been launched by eToro, a UK-based investment platform that offers its users the ability to trade cryptocurrencies, stocks, ETFs, currencies, indices and commodities, or to copy the trades of leading investors.
eToro launched an OTC (over the counter) Bitcoin trading desk for institutional investors in June of this year. At the time, eToro Founder Yoni Assia told Business Insider that “we’ve actually set up our corporate team here in the UK to start setting up accounts to trade on eToro. We’ve announced that we’re launching the exchange as well so, between the exchange and the OTC desk, we’re also starting to serve more potential institutions and financial institutions.”
eToro is also making efforts to connect with new kinds of investors for its cryptocurrency offerings. The company made headlines in August when it announced a partnership with seven Premier League football clubs.
Matt House, CEO of SportQuake (the company that brokered the deal between eToro and the leagues) told Finance Magnates that “through a properly planned and bought campaign, eToro could steal a march on their competitors and put the brand, Bitcoin and blockchain at the heart of The Premier League conversation worldwide.
The old saying goes–if you can’t open a door, open a window. As such, eToro and other companies in the cryptocurrency space are likely to continue to expand their offerings for institutional investors in spite of the SEC’s bearish attitudes toward Bitcoin ETFs.
Where there’s a will, there’s a way, and institutional investors will indeed find their way into the cryptocurrency space. It’s just up to crypto firms to create the right products for them before competition grows too fierce.