Decoding the intricacies of Bitcoin ETF approvals in the present market
Peter Dunworth, the founder of The Bitcoin Adviser, recently shared his perspective on the highly anticipated approval of Bitcoin exchange-traded funds (ETFs). During a candid conversation with Dale Warburton, Dunworth expressed doubt about the widespread belief that multiple ETFs would be approved by January 10th.
Dunworth began by questioning the prevailing sentiment that Bitcoin ETFs were guaranteed to receive approval by the set deadline. He argued that regulatory bodies, such as the Securities and Exchange Commission (SEC), operate autonomously and may not strictly adhere to predetermined timelines. Dunworth emphasized the independence of these institutions, suggesting that they have their own agenda.
Drawing attention to a potential obstacle to approval, Dunworth delved into the issue of custodians for the ETFs. He pointed out that Coinbase currently represents 90% of the custodianship for the 20 ETFs under consideration. He raised concerns about Coinbase’s ongoing investigation by the SEC for unregistered securities, indicating that this could be a valid reason for regulatory hesitation.
Dunworth also predicted a scenario in which the approval of all 20 ETFs simultaneously could create chaos in the Bitcoin market. He explained that such widespread approval would result in a significant influx of capital, potentially amounting to $10 to $20 billion, entering the market within a short period of time. This influx, he argued, could strain the market and lead to extreme price volatility.
Furthermore, Dunworth discussed the possibility of staggered ETF approvals, as regulators may show preference towards certain institutions over others. He dismissed the idea that approval would strictly follow the chronological order of applications and raised the prospect of regulatory favoritism.
In an unexpected twist, Dunworth challenged the notion of a seamless approval process, citing uncertainties surrounding ongoing investigations, the SEC’s approach, and the potential impact of a sudden influx of capital on the market. He highlighted unresolved issues involving major players like Coinbase and Grayscale, suggesting that these factors could contribute to a delay in the expected ETF approval.
Tags: Bitcoin ETF