Posted by William P. Eason on February 22, 2017 - 2:37am

Bitcoin Price Moons as ETF Decision Looms

 

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Bitcoin has increased by around $150 over the past week, rising from $985 on the 14th of February to a high of $1,123 earlier today.

Bitcoin Rallies in Anticipation of the ETF Decision – image from cryptowatch

Yuan’s fall might be one reason as it has weakened over the past four days, but the price premium on western exchanges suggests the main reason appears to be the looming ETF decision.

The bitcoin market has recently been pre-occupied with actions by PBoC, but with that settling to seemingly the setting up of a new regulatory framework, the market might now be trying to price in the ETF decision.

If it is approved, it would be the first of its kind, with the asset, too, utterly unique as the digital currency does not correlate with anything else – not gold, not stocks – according to Kevin Lu, a hedge fund analyst, making it a potentially attractive addition to investors’ portfolio for increased diversification.

But, will the ETF be approved? – that’s what everyone is asking. Prediction markets are saying no, price appears to be saying yes, SEC is keeping hush hush. In short, we do not know until March the 11th at the latest.

What we do know is that this would be the first big decision of the new Trump civil servants.

Unprecedented Interest

“There’s rarely ever interest in filings, let alone the hype associated with this one, let alone betting on whether it’ll be approved!” said Eric Balchunas, ETF analyst at Bloomberg Intelligence.

It’s not the first-time regulatory decisions by US authorities have gathered unprecedented levels of interest. The Senate hearing in 2013 had everyone’s attention. CFTC’s hearing on bitcoin – remember “Crypto Cloony”? – had most live views ever.

Usually, their decisions are gray and boring, but in this space, they are charting new ground. As such, their approach is precedent setting and has considerable implications for the future direction of digital currencies.

We have seen ways of doing it right and ways of doing it wrong. The BitLicense, for example, was a disaster. On the other hand, London’s sandbox is very much a success now emulated across the world.

As this space begins to enter the mainstream, regulators have the choice of promoting innovation and benefiting from it or sending it away to other jurisdictions’ gains.

The previous Democratic administration seemingly choose the latter, to the benefit of Chinese exchanges which rose and rose through the offering of margins and futures – still seemingly denied by CFTC to regulate US-based exchanges.

The new Republican administration is seen as far more friendly to this space. With an emphasis on deregulation and promoting innovation, they might hopefully take London’s torch and lead in innovative regulations.

Andrew Quentson on 21/02/2017

William