On October 6, Pantera Capital published an investor’s note written by Dan Morehead, the company’s CEO. Unlike the myriad of crypto investors who believe that a bitcoin exchange-traded fund (ETF) will send the crypto asset’s value to the moon, Morehead explains it could be a negative event and when it officially launches he said he “might want to take some chips off the table.”
Bitcoin Price Bolstered by ETF Speculation, Dan Morehead Discusses a Bitcoin ETF Approval and Possible Negative Effects
The price of bitcoin (BTC) is riding much higher than last month as the crypto asset tapped a high on Monday morning (EST) reaching $57,093 per unit. Four days ago, Bitcoin.com News reported on the possibility of a bitcoin exchange-traded fund (ETF) getting approved by the end of the month. It has been said that the probability of an ETF being approved by the U.S. Securities and Exchange Commission (SEC) will be high by the end of October and the beginning of November. Because of this higher probability, speculators think BTC’s price has been bolstered by the news.
Last Wednesday, Dan Morehead and his firm Pantera Capital published a blog post called “The Next Price Era.” The blockchain investor letter discusses a number of subjects such as a “post-halving update,” “price cycles,” and includes one particular section that discusses a bitcoin ETF getting approved called “buy the rumor, sell the fact.” Morehead stresses that the line of thinking (buy the rumor, sell the fact) is “definitely working in our space.”
“When he was the chairman of the CFTC, Chris Giancarlo pointed out a wild one I hadn’t put two and two together on,” Morehead wrote. “All during 2017, the markets were rallying with the mantra ‘When the CME lists bitcoin futures, we’re going to the moon!!!’ The markets did rally – 2,440% until **the very day** futures listed. That was the top. One of those -83% bear markets started that day,” the Pantera executive said. Morehead added:
We recently repeated that cycle. The whole industry reveled in Coinbase’s upcoming direct listing. The bitcoin market was up 822% coming into the day of the listing. Bitcoin peaked at $64,863 that day and a -53% bear market started. Will someone please remind [me] the day before the bitcoin ETF officially launches? I might want to take some chips off the table.
North American Bitcoin ETFs Already Exist in Canada, SEC Approves Volt Crypto ETF
Over the years, there have been many discussions on whether or not an exchange-traded fund tethered to bitcoin (BTC) would be beneficial to the market price. In 2017, Tariq Dennison, in an opinion piece published with Seeking Alpha, says a “cryptocurrency ETF would divert attention to price speculation and higher volatility rather than to productive applications of blockchain technology.” Bitcoin evangelist Andreas Antonopoulos has even published a Youtube video called: “Bitcoin Q&A: Why I’m against ETFs” on August 14, 2018.
Speculators believe a U.S.-based bitcoin ETF would allow investors from the country to invest and “real” bitcoin would be obtained by these funds making the currency even more scarce. On the other hand, some believe the market price of bitcoin (BTC) could get manipulated if an ETF is approved. Many investors believe that gold and silver ETFs were not helpful to precious metals markets and actually suppressed the price of gold and silver. Though the U.S. SEC has not approved a bitcoin ETF yet, this past March three North American bitcoin ETFs were approved by Canada’s securities regulators.
The SEC has approved the Volt Crypto Industry Revolution and Tech ETF which doesn’t hold crypto assets but rather tracks “Bitcoin Industry Revolution Companies.” The ETF is listed on the New York Stock Exchange (NYSE) under the market ticker “BTCR.” Speculators assume the first bitcoin ETF will be tied to bitcoin futures markets offered by the world’s largest financial derivatives exchange CME Group.
What do you think about Pantera Capital CEO Dan Morehead’s opinion on bitcoin ETF approval and what might happen after? Let us know what you think about this subject in the comments section below.
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