April 25, 2024

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[THE INVESTOR] Cryptocurrencies, which have lost half their value this year, saw a two-month high last week, as investors were hopeful that the US Securities and Exchange Commission will approve a Bitcoin exchange-traded fund.

Expectations were high that following the launch of Bitcoin futures in December last year, the US financial watchdog could finally embrace digital currencies for what could be mass-adoption, sending positive signals to the rest of the world.

The agency on July 26 had rejected the second attempt by founders of crypto exchange Gemini to list shares of what would have been the first-ever Bitcoin ETF, citing issues regarding fraud and investor protection. 

Cryptocurrency prices fell following the news but investors weren’t all disappointed as there are several similar projects in the pipipeline awaiting approval, including ProShares ETF, GraniteShares ETF, Direxion 5 ETF and Van Eck/SolidX Partners ETF and Bitwise ETF. Analysts generally see that it is just a matter of time before approval is granted. 

“If the SEC gives its approval (for Bitcoin ETFs), I firmly believe that Bitcoin prices could see a second rally like it did last year,” a cryptocurrency investor who wanted to use his last name Lee only told The Investor last week. 

Cryptocurrency and derivatives analyst at NH Investment & Securities Park Nok-sun agreed. “They will eventually get approval and then it would be an enormous catalyst for the cryptocurrency market as it will lead to an influx of capital from institutional investors and other traders,” he told The Investor. “While I cannot tell for sure when they will get an approval, until then prices will fluctuate as investors speculate on the SEC’s decision.”

Principal analyst of Huobi Korea Kwon Hyug-bin also agreed but said it needs more time. “I definitely think that ETFs will be approved. However, there are some road blocks that have to be overcome such as custody, insurance as well as investor protection," Kwon said. "As some people are concerned about price manipulation, It would take some time for Bitcoin ETFs to be validated."

Some argue that the hopes of approval by the SEC are misleading investors. “It is still too early to approve Bitcoin ETFs. The fundamental value of cryptocurrencies rests on how the ecosystem of blockchain evolves,” Binh Ki-beom, an economics professor at Seoul-based Myongji University said.

Meanwhile, bitcoin prices were slightly boosted over the weekend by an announcement that Intercontinental Exchange, owners of the NYSE, Starbucks, BCG and Microsoft would be partnering to launch a platform called Bakkt aimed at consumer use of cryptocurrencies.

By Park Ga-young (gypark@heraldcorp.com)