Will ETFs help to contain Bitcoin price rises?

[Jet Cash]

Everybody seems to think that the granting of ETF licences will push up the price of Bitcoin. I don't agree, and I think that in most cases they will help to contain the dramatic price rises that some people assume will follow. I believe that they will reduce the quantity of "physical" Bitcoin that institutional investors will buy. Institutional investors have a few ways to hold a Bitcoin "investment"

Holding methods that will reduce the available supply, and cause a price increase.

1. The purchase of Bitcoin and keeping them in a wallet or custodial service.
2. The purchase of an ETF linked to Bitcoin purchases recorded in a blockchain transaction.

Speculative methods that are not based on the available supply.

3. The purchase of a paper contract that provides for settlement in fiat. This will not result in a physical purchase when the contract is closed, but it may affect the sentiment surrounding the Bitcoin price.
4, BAAKT - This needs a bit of investigation. On the face of it, contracts are based on physical coins and other assets. The small print states that re-hypothecation and the combining of assets will be allowed for investment and repayment. This seems to open the way for fractional reserve holdings in Bitcoin.

Of course the hype surrounding ETFs may increase the awareness of Bitcoin in the investing community, and this could lead to an increase in physical purchases.

[1715127585]

1715127585

[talkbitcoin]

Everybody seems to think that the granting of ETF licences will push up the price of Bitcoin.

it can increase the price not because of the reasons they say but only because it is considered a good news and it is hyped up so the market in a way is waiting for it and then decide based on its result.
something like Futures last year where suddenly people got too excited and went on a buying frenzy.

Speculative methods that are not based on the available supply.

interesting theory, i just have a question. why do you think these are not based on available supply? aren't papers, contracts... supposed to be backed by real bitcoins? which means the company issuing these contracts have already locked some coins (supply) away that is not allowed to sell contracts.

[1Referee]

The only problem with custody solutions holding tons of coins on behalf of institutions, is the fact that it grants them a serious amount of voting power within this ecosystem in the future, which is something I completely disregarded initially due to my excitement. For that specific reason I hope that we'll not be seeing any actual coin backed ETF's pop up in the forthcoming years, regardless of how much it could pump the price in the future.

An increase in price isn't worth anything when you have the same institutions (that people try to avoid dealing with in the legacy economy) control the ecosystem in here as well.

Cash settled futures and ETF's are perfectly fine as long as they don't touch the underlying asset, everything else should be a no go. In other words, we have to thank the SEC for not letting the VanEck ETF go through.

[Samarkand]

The only problem with custody solutions holding tons of coins on behalf of institutions, is the fact that it grants them a serious amount of voting power within this ecosystem in the future, which is something I completely disregarded initially due to my excitement. For that specific reason I hope that we'll not be seeing any actual coin backed ETF's pop up in the forthcoming years, regardless of how much it could pump the price in the future.
...

This is actually a serious problem if a Bitcoin ETF does get approved.
On the other hand custodial solutions like Xapo are already storing the Bitcoin
equivalent of billions of $ and haven´t abused that kind of voting power so far.
In fact Xapo is hardly making any news unlike other companies in the space
like Bitmain.

...
Cash settled futures and ETF's are perfectly fine as long as they don't touch the underlying asset, everything else should be a no go.
...

Do we really need more of these BTC derivatives? In my opinion they just open
up further possibilities for the manipulation of the BTC spot price. It is pretty suspicious
how the BTC price performs around the expiration date of the BTC futures.

[Harlot]

Yup totally agreeing with you holding off a certain supply of Bitcoin out of the main trading market will certainly affect the prices upwards as you have cut the supply and sometimes the demand gets a little bit triggered by their offers in the buy side, meaning they will most likely to push their offers a little bit higher in order for them to see some more people selling again. But most likely if they start buying large amounts of BTC in their first transaction, that transaction itself will most likely trigger a price action.

[The Sceptical Chymist]

3. The purchase of a paper contract that provides for settlement in fiat. This will not result in a physical purchase when the contract is closed, but it may affect the sentiment surrounding the Bitcoin price.

Yep, this would be exactly like the precious metals market, where the "market price" isn't the average price you pay at your local dealer, but the "paper price" created by the traders.

This may be a naive question, but what price is going to be reported by sites like coinmarketcap and the like--the average price from crypto exchanges like binance or from ETFs?  What price is preev going to report?

I do think that ETFs are going to have a stabilizing effect on bitcoin, but honestly that's just a guess.  And an ETF isn't exactly like trading futures or even options, like what the stock market has....right?  In any event, I think if the ETFs make for less volatility, that will be a good thing.  Maybe the traders won't like it, because they can make money when bitcoin is volatile, but it should be good for the rest of us.  It would certainly bode well for the future of bitcoin as a currency.

[Idrisu]

Since bitcoin has been affected in price since the issues of the ETF come up I think if it is approve in September bitcoin is going to get pump and many institutional investors are going to put in a lot of money that is going to bring positive changes in pricing.

[1Referee]

This is actually a serious problem if a Bitcoin ETF does get approved.
On the other hand custodial solutions like Xapo are already storing the Bitcoin
equivalent of billions of $ and haven´t abused that kind of voting power so far.
In fact Xapo is hardly making any news unlike other companies in the space
like Bitmain.

Xapo stated that it had like $10 billion worth of Bitcoin in reserves, which insane. It's just as big of a problem as when institutions get to have a third party storing that many coins on their behalf. Currently Bitcoin isn't yet a threat to the financial system, but what if it becomes? Xapo is an easy target for governments, there is no way to get around that.

It also made me think about Satoshi directly. While his power as contributor to Bitcoin is no longer there, his coins are a powerful weapon to still somewhat be a factor of influence. It might very well explain why he's not touching any of his coins. Think about it, why should he touch them? Bitcoin is only increasing in value, there are less and less larger holders out there, which at some point means that he's the absolute don in here.

Do we really need more of these BTC derivatives? In my opinion they just open
up further possibilities for the manipulation of the BTC spot price. It is pretty suspicious
how the BTC price performs around the expiration date of the BTC futures.

We definitely don't need them, but we can't avoid them either. I rather have institutions and whoever trades these instruments play with cash than the underlying asset. In the end, even without these instruments there will be plenty of manipulation (there has always been).

[jseverson]

The only problem with custody solutions holding tons of coins on behalf of institutions, is the fact that it grants them a serious amount of voting power within this ecosystem in the future, which is something I completely disregarded initially due to my excitement. For that specific reason I hope that we'll not be seeing any actual coin backed ETF's pop up in the forthcoming years, regardless of how much it could pump the price in the future.

Are ETFs the only way for institutional investors to inject their money into the market though? I feel like when it's all said and done and they wanted to dip their toes into the market, the lack of ETF approval won't stop them. They don't exactly have a barrier for entry given the open nature of the market after all, so rooting against that option may not amount to much in the end. Then again, closing it off does give them one less reason to enter.

Either way, it's likely going to be at least a few couple of years before we have to worry about an actual ETF approval thanks to the market's vulnerability to manipulation.

[1Referee]

Are ETFs the only way for institutional investors to inject their money into the market though? I feel like when it's all said and done and they wanted to dip their toes into the market, the lack of ETF approval won't stop them. They don't exactly have a barrier for entry given the open nature of the market after all, so rooting against that option may not amount to much in the end. Then again, closing it off does give them one less reason to enter.

It's a friendly and less risky long term form of exposure that futures don't really grant you. Also, with futures contracts on platforms as CBOE and CME you're risking a lot, literally. In order to just open a long or short position, you need to put down a significant margin amount (which also varies per broker), otherwise you can't even mess around with them. It makes shorting and manipulating Bitcoin more expensive, which is a good thing.

Bitcoin has one aspect to it that makes it less desirable for professional parties, which is its taint. That's directly the main reason there is an insane level of demand for freshly minted coins with no circulation history. The premiums for these coins have gone through the roof. People at least don't have to worry that miners will dump on the market, which most of them in the last year or two never really did anyway.

[rickadone]

We all know the price of bitcoin is staying same even after ETF because we knew the result. The etf is not important because it may get agreed or accepted but it is important because bitcoin is not a legit investment option. Just couple years ago everyone was looking at bitcoin like "bitcoin is used to buy drugs on dark net" but now they are talking "bitcoin has applied for ETF so we can have bitcoin investments" which is an insane increase in the perceptions of people.

If we can improve from "drug money" to "legit investment option" think what would happen if we improved from "legit investment option" to "common investment option like gold" ? It would create a craze once again and can't even imagine what the prices will be like.

[Herbert2020]

i don't think so for simple reasons.
bitcoin price has always been determined on exchanges and these exchanges have always been small despite growing bigger over the years. introduction of ETF is not going to change that. so for example when there is a large injection of money into the exchanges from people to buy bitcoin (for example last year when 1 million new users were signing up on Coinbase to buy bitcoin per week) the price will shoot up the way we saw it before.

ETF existing is not going to change that, there is still the same sell orders on the same exchange with same volume (more or less) and when it is being bought like that, price will shoot up. same with when the same group panic sells.
all the manipulation will also exist which makes things the same as always. ie roller coaster

[Deubila]

Since bitcoin has been affected in price since the issues of the ETF come up I think if it is approve in September bitcoin is going to get pump and many institutional investors are going to put in a lot of money that is going to bring positive changes in pricing.

Also look forward to this relief. If this situation happens continuously. I think a project that wants to develop in bitcoin is also very difficult. Looking forward to favorable for the investment community to feel secure.

[hase0278]

This may be a naive question, but what price is going to be reported by sites like coinmarketcap and the like--the average price from crypto exchanges like binance or from ETFs?  What price is preev going to report?

Sites like coinmarketcap and preev will probably continue to report the average price from crypto exchanges unless the site owners decide to report average price of bitcoin from ETFs or from both of them.

Do we really need more of these BTC derivatives? In my opinion they just open up further possibilities for the manipulation of the BTC spot price.

I believe we need ETF in order to help make it easier for institutional investors to invest in bitcoin. We also need it so that bitcoin can be used more on payments for goods and services offline.

[omonuyak]

ETF to some extent can contain bitcoin price and we just need to be able to to understand this ETF in other not to see that things that are not to influence the market will start to influence the market. Bitcoin is going to move up in price in future if ETF get approved.

[hatshepsut93]

The only problem with custody solutions holding tons of coins on behalf of institutions, is the fact that it grants them a serious amount of voting power within this ecosystem in the future, which is something I completely disregarded initially due to my excitement. For that specific reason I hope that we'll not be seeing any actual coin backed ETF's pop up in the forthcoming years, regardless of how much it could pump the price in the future.

An increase in price isn't worth anything when you have the same institutions (that people try to avoid dealing with in the legacy economy) control the ecosystem in here as well.

Cash settled futures and ETF's are perfectly fine as long as they don't touch the underlying asset, everything else should be a no go. In other words, we have to thank the SEC for not letting the VanEck ETF go through.

It's the same as with exchanges holding coins, when we had Bcash/SegWit2x drama last year, almost all exchanges took neutral position and tried their best to give access to both chains for their users, although some exchanges had some questionable way to name potential after-split coins.
So, I wouldn't worry about voting power, it's very unlikely that a regulated entity like ETF would try to do something contentious, unless of course they would support government-backed fork. But even in that scenario the amount of coins is not the main factor during the fork, the main factor is everyday users, that's what important in long term, not the hashrate, not the price.

[Soots]

ETF to some extent can contain bitcoin price and we just need to be able to to understand this ETF in other not to see that things that are not to influence the market will start to influence the market. Bitcoin is going to move up in price in future if ETF get approved.

Hopefully etf will be approved soon, because many people right now doesn't seem to understand the whole thing about etf. Even myself couldn't relate what this was all about and I just consider it by default as bitcoin's development strategiv approach which most btc admins used in order to help the system of bitcoin become accessible around the world. Though it gives definite purpose, we must partake for it and support what maybe able to achieve further for goodness of bitcoin.

[bobo012]

ETF to some extent can contain bitcoin price and we just need to be able to to understand this ETF in other not to see that things that are not to influence the market will start to influence the market. Bitcoin is going to move up in price in future if ETF get approved.

Hopefully etf will be approved soon, because many people right now doesn't seem to understand the whole thing about etf. Even myself couldn't relate what this was all about and I just consider it by default as bitcoin's development strategiv approach which most btc admins used in order to help the system of bitcoin become accessible around the world. Though it gives definite purpose, we must partake for it and support what maybe able to achieve further for goodness of bitcoin.

Yes, it would be big news, and we would get rid of sec pumping and dumping the price with their decisions. Bakkt is coming and we wont need to have etf any more, it will be this year or early next year

[yndye]

Hopefully etf will be approved soon, because many people right now doesn't seem to understand the whole thing about etf. Even myself couldn't relate what this was all about and I just consider it by default as bitcoin's development strategiv approach which most btc admins used in order to help the system of bitcoin become accessible around the world. Though it gives definite purpose, we must partake for it and support what maybe able to achieve further for goodness of bitcoin.

I cannot relate that much about the technicalities of ETF too but what I know is that it would be a big help for bitcoin to be exposed to more people and would be attracted to invest on it. It would help push the price so that it will have the attention of the media and then more people would search about it just like what happen last year. I did check gold and when it has an ETF, its price surge that's why people are anticipating that the same thing will happen with bitcoin.

[jfelix]

ETFs backed by real bitcoin yes would help the price rise, ETF-s not backed by real bitcoin will hurt the price more.