1st October 2021 > > Exchange traded funds.

tl;dr

A futures based BTC exchange traded fund (ETF) looks ever more likely.

Market Snap

Market Wrap

It’s very cheering to see a decoupling of BTC from equities, helping to embellish cryptos’ role as a diversified risk asset. The financial world is short of those these days, in the face of the mammoth market manipulation known as quantitative easing.

Equities clearly do not like the ongoing uncertainty engendered by the failure to get agreement on the two legislative centrepieces of Joe Biden’s presidency – the $1.5 TRILLION infrastructure regeneration bill and the $3.5 TRILLION human infrastructure bill.

The former is being blocked by left leaning Democrats acting in concert until they receive reassurance that the latter and larger bill will be passed.

The latter bill is being blocked by centrist Democrat Joe Manchin who has described it as “fiscal insanity”.

A little bit of party unity wouldn’t go amiss right now.

Curious Cryptos’ Commentary – Elon Musk

Elon, a noted crypto enthusiast, has been pontificating on the role of regulation and legislation in the development of the crypto revolution.

He is right when he says this:

“It is not possible to, I think, destroy crypto but it is possible for governments to slow down its advancement.”

When asked what the SEC should do about cryptos, he was wrong when he said this:

“I would say, do nothing”.

And his opinion on the China “ban” is stating the obvious:

“I suppose cryptocurrency is fundamentally aimed at reducing the power of a centralized government and they don’t like that.”

Curious Cryptos’ Commentary – The SEC and that BTC exchange traded fund (ETF)

Gary Gensler, Chair of the SEC, has several applications for a BTC ETF sitting forlornly in his in tray.

The CCC is firmly convinced that the approval of a physical BTC ETF will unleash a tsunami of investor cash, both retail and institutional, into the BTC market. This will put dramatic upward pressure on the BTC price.

Back in August, Gary publicly announced that the SEC would look more favourably on a BTC ETF that invested in BTC futures, as traded on the Chicago Mercantile Exchange (CME) rather than a physical BTC ETF.

This week, Gary reiterated this stance which has led to speculation that a futures-based ETF will soon become a reality.

This will be good news, but not as good as if a physical ETF gained approval.

There is a basis between futures and spot prices which will further dilute the price action of the ETF compared to spot. Investors are also more reluctant to invest in futures products than physical products.

The CCC had high hopes for Gary on his appointment as Chair of the SEC.

I do hope he won’t let us down at the 11th hour.