- A Bitcoin ETF is the holy grail of many Bitcoin supporters and holders
- Such an eventuality would open the floodgates to a new wave of institutional acceptance
- What are the odds of a Bitcoin ETF being granted in 2021?
Talk of a potential Bitcoin ETF has been in the wind since the Winklevoss twins first applied for one back in 2013, but seven years later we still don’t have one. With institutional acceptance of Bitcoin gathering pace massively in 2020, what are the odds of a Bitcoin ETF in 2021? We run through the pros and cons of such a development.
Institutional investment – the expenditure of billions of dollars on Bitcoin by publicly traded companies, institutions, and hedge funds has led to a sentiment shift in Bitcoin, with the result that even its bitterest opponents have admitted that its fundamentals might, after all, be sound.
Regulation – Bitcoin, and the cryptocurrency sector in general, are more heavily regulated than ever before, with signs that even tighter controls and monitoring are on the way. Anonymous crypto usage is becoming harder and harder, which only helps increase its legitimacy.
Security – Security of funds is without question the best it has ever been. 2020 has seen far fewer exchange hacks than in previous years, while exchanges now work together and with law enforcement to track down stolen funds and prevent them from being cashed out where possible. Concerns over security of private wallets will of course remain, but this can only improve with education.
Time – Obtaining an ETF is a lengthy process, with the SEC almost always extending their deadlines until the very last day, meaning that new applications could be waiting 14-18 months for a decision. The rejection of Wilshere Phoenix’ Bitcoin ETF application in March meant that there were none pending, and any starting in 2021 are unlikely to have a verdict given in the same year.
Manipulation – Price manipulation has always been a key rejection reason, and on that score not a great deal has changed. Yes, there is far less Bitcoin on exchanges and the number is decreasing month on month, but the fact remains that while 2% of Bitcoin wallets own 95% of the supply there are still massive price manipulation concerns.
Bitcoin ETF Remains in the Balance
While it is true that institutional acceptance of Bitcoin will certainly help its case, particularly the relationship between PayPal, Paxos, and the New York State Department of Financial Services, the principle of a Bitcoin ETF remains in the balance as the other areas of concern don’t seem to have been addressed yet.
The timing could also be crucial, with 12 months likely not enough time to see a Bitcoin ETF filed and approved, meaning 2022 might be a more likely timeframe.