2019-11-21 CNBC - Why Bitcoin Fund’s SEC filing may be a big crypto breakthrough

[cr1776]

An interview with one of the people from Grayscale (the people with the bitcoin investment trust) about why an SEC product is needed and the impact of the halving next year.

https://www.cnbc.com/video/2019/11/20/why-bitcoin-funds-sec-filing-may-be-a-big-crypto-breakthrough.html

[1714605898]

1714605898

[1714605898]

1714605898

[DooMAD]

Ugh.  It's going to be rejected.  Calling it now.

and what it means for investors wanting to get involved in digital assets.

It means nothing other than more baseless hype.  It's not "needed", but some people like to think it is, because they believe it will raise prices.  Institutional investors have enough markets to fraudulently manipulate, they don't need another one.

[Carlton Banks]

Ugh.  It's going to be rejected.  Calling it now.

well, maybe

the perfect timing to accept a BTC ETF is probably some kind of trade-off between peak bull-market bitcoin euphoria and peak major bear-market gloom in basically any established market (some kind of magical thinking linking that market to the Bitcoin market would be no doubt easy to popularize ) Plenty of dumb money around to shake out in that scenario

it seems just as likely, however, that the SEC never accept any crypto ETF, or rather that a crypto-based trading platform usurps the whole financial system before they get a chance to stay relevant (the whole financial market landscape is increasingly looking like a complete joke, not a very funny one either).

But hey, that's still 50:50 odds on for an ETF!!

[1Referee]

The certainty we do have is that each time we are getting closer. It might not mean much by itself right now, but it generally is a process of years to get an etf to be approved. With Bakkt generating ~2700BTC in volume today and the CME doing quite well for months straight, there is some serious legitimate us dollar volume being generated, which helps countering the non us dollar volumes overseas.

The thing I don't like about these institutional products is that the spot price is going to respect their trading hours in the sense that we will get to fill the gaps that occur whenever there is a large move in the weekend for example.

[bbc.reporter]

Ugh.  It's going to be rejected.  Calling it now.

and what it means for investors wanting to get involved in digital assets.

It means nothing other than more baseless hype.  It's not "needed", but some people like to think it is, because they believe it will raise prices.  Institutional investors have enough markets to fraudulently manipulate, they don't need another one.

Agreed. I am also skeptical. Also, anything out of CNBC appears to be more for promotional purposes than for anything else. I remember Brian Kelly teaching everyone how to buy XRP on Poloniex for more than $1.00 each before it was dumped hehehe.

[CryptoBry]

An interview with one of the people from Grayscale (the people with the bitcoin investment trust) about why an SEC product is needed and the impact of the halving next year.

Well, let's hope that Grayscale's application with the SEC can be approved soon. Personally, I am in doubt of the real chance of this application as the reasons cited by SEC in the many ETF rejections in the past are still existing today. The right time for a platform like this is not yet today and there is nothing we can do if that is they way SEC is appraising things. When a platform is seeking regulation and recognition, the power is always in the approving agency and all we can do is wait and hope. But the question is: Do we really need this one or is this not just another platform where people can be able to manipulate Bitcoin in the name of getting institutional investors on board?

[magneto]

After so many rejections, why do people expect any different?

There has not been any major fundamental changes to the way that these ETFs are going to be looked at or presented to the SEC. So why do people keep thinking that the SEC's attitude towards these ETFs are going to change time and time again?

This kind of reminds me of the quote from somewhere that insanity is doing the same thing over and over and expecting different results - the same can be applied here.

[hatshepsut93]

After so many rejections, why do people expect any different?

There has not been any major fundamental changes to the way that these ETFs are going to be looked at or presented to the SEC. So why do people keep thinking that the SEC's attitude towards these ETFs are going to change time and time again?

This kind of reminds me of the quote from somewhere that insanity is doing the same thing over and over and expecting different results - the same can be applied here.

Because it can be quite lucrative to be the first one to enter this field, and it doesn't cost them too much trying. Bitcoin has gone from trading for a few cents on some homebrew hobby exchanges to having Bitcoin futures on CME, so sooner or later there will be an ETF.

[buwaytress]

Yeah, I'm with DooMAD here.

1. The only people who're saying it's needed are the people launching these products. I keep saying that the actual institutionals who really want in, have gotten in already, mainly individually or through OTC desks or through PEs. That wave happened in 2016/17. And they've been hedging way longer than we think they have.
2. All these guys keep saying there's demand, and they're getting pressure from clients. But come actual launch days, there's no volume. So clearly, that demand's made up by the very guys creating these products.

[Carlton Banks]

I keep saying that the actual institutionals who really want in, have gotten in already, mainly individually or through OTC desks or through PEs. That wave happened in 2016/17. And they've been hedging way longer than we think they have.

yep, the idea that big institutions are not in the BTC market already is a joke. Supressing that information as much as possible is important to such institutions who what to build up a decent inventory. The never-ending "ETF soon" story could be a part of that effort, as lazy and risk averse investors are probably interpreting the situation as: no ETF = it's too soon to get into this madness

2. All these guys keep saying there's demand, and they're getting pressure from clients. But come actual launch days, there's no volume. So clearly, that demand's made up by the very guys creating these products.

I don't know what the requirements are for data-reporting, but anything could be happening in reality with these figures. We're talking about Wall Street firms here

[figmentofmyass]

The thing I don't like about these institutional products is that the spot price is going to respect their trading hours in the sense that we will get to fill the gaps that occur whenever there is a large move in the weekend for example.

i don't think it has anything to do with respecting regulated exchange trading hours. it's just how "mature" markets filled with institutional traders act. gaps---particularly exhaustion gaps---often get filled.

bitcoin doesn't have gaps because it trades 24/7 but it does sometimes move extremely fast on relatively low volume. these low volume areas often get filled for the same reasons gaps do.

i've been finding as time goes on, the BTC market increasingly looks like old school markets. the endless whipsaws, all the fading into irrational exuberance. bitcoin is just growing up IMO.

[cr1776]

Yeah, I'm with DooMAD here.

1. The only people who're saying it's needed are the people launching these products. I keep saying that the actual institutionals who really want in, have gotten in already, mainly individually or through OTC desks or through PEs. That wave happened in 2016/17. And they've been hedging way longer than we think they have.
2. All these guys keep saying there's demand, and they're getting pressure from clients. But come actual launch days, there's no volume. So clearly, that demand's made up by the very guys creating these products.

The guy from Grayscale made some good points though, there are plenty of people who would like to easily get in.  Likewise there are institutions that would like to get in, but don't have an easy vehicle to trade, don't want to be concerned about who in their organization is holding the private keys, and don't want to have to go through the required steps that holding the private keys would require in order to have their holdings insured.  Certainly some hedge funds have gotten in, but there are huge markets that will open with an SEC approved product and just because some institutions may be in doesn't mean that many of them are.  Look at the premium that GBTC enjoys because it is one of the few ways to easily get in from a brokerage account.

Whether the SEC will have a change of heart this time is unknown, but eventually they will do so.  Every time that there is an application to deal with the perceived shortcomings of previous applications it gets one step closer to approval. 

It certainly isn't "needed" in the sense that one needs air, but from an investment perspective, there are many organizations that would like to add crypto to a model portfolio but can't do so without a SEC approved product.  So from that perspective there is indeed a need.  E.g. a Merrill, Vanguard, Fidelity, or Schwab for model portfolios, robo advisors, or opening up the market for retirement accounts (IRAs, 401ks, 403bs etc).  Even opening up the market for regular brokerage accounts with a product that doesn't have a huge premium over the bitcoin market price.

[squatter]

Certainly some hedge funds have gotten in, but there are huge markets that will open with an SEC approved product and just because some institutions may be in doesn't mean that many of them are.  Look at the premium that GBTC enjoys because it is one of the few ways to easily get in from a brokerage account.

Exactly -- I can't think of any other reason why GBTC trades with a 30% premium to NAV. I imagine that premium will decline significantly once more accessible bitcoin derivative securities are available on the market.

Whether the SEC will have a change of heart this time is unknown, but eventually they will do so.  Every time that there is an application to deal with the perceived shortcomings of previous applications it gets one step closer to approval.

Jay Clayton seems perpetually unimpressed by these ETF applications. And fundamentally, the SEC's concerns re: manipulation and unregulated markets haven't been -- or perhaps can't be -- addressed.

If the regulated futures markets start controlling spot market pricing -- similar to London and COMEX in the gold market -- I could see the SEC being more easily persuaded.