With the increasing popularity of cryptocurrencies, the number of institutions and traditional investors who want to invest in digital assets has gradually increased. But currently, they cannot do this through ETFs, and multiple ETFs are still awaiting approval from the US Securities Regulatory Commission (SEC).
Although the news of these applications may be beneficial to Bitcoin in the short term, because the crypto market is still very young, perhaps many investors end up just as "passengers" in this market.
For many people, the words American stock market are intertwined with capitalism, American dream, and success. However, the most important connection in the subconsciousness of most investors is the security and supervision provided by the US SEC and ensuring equal market opportunities for all. Investors invest trillions of dollars in the market every year, as well as up to 50 trillion dollars in retirement funds. If there is no security guarantee, people will not rest assured that they will put their funds in such a dangerous environment. However, if the SEC chooses to approve Bitcoin ETFs in the near future, then manipulation and lack of supervision are what may happen.
Among the many Bitcoin ETFs currently waiting for the SEC’s judgment, some are well-known companies from the financial world, including Fidelity, while others are less well-known, such as Anthony Scaramucci’s SkyBridge. No matter who is behind them, the goal is to provide a Bitcoin investment tool for the trillions of dollars that currently cannot directly enter the crypto market.
There are currently some crypto trusts on the market, such as Grayscale Bitcoin Trust, which allows institutions to buy Bitcoin for their clients, but they usually trade at a high premium on the open market, so they are relatively inefficient for ordinary investors. Bitcoin ETF and digital assets are backed 1:1, so even if they are listed and traded in the future, the price premium will not be too high. It will provide an investment method for a large number of new funds, and will drive and increase the unprecedented investment interest in Bitcoin's 13-year history.
Although this sounds simple, in the long run, approving ETFs now will do more harm than good to the cryptocurrency market.
Currently, the cryptocurrency market is completely unregulated. This means that anyone, including Elon Musk, can buy and sell, lie, and manipulate prices for profit. This is part of the reason why the market is so volatile. Due to the decentralized nature of cryptocurrency and the lack of traceable "controllers", it is difficult for the government to figure out how to regulate this new asset class.
If the United States decides to enforce traditional securities laws to prevent manipulation, and investors in other parts of the world are not bound by these regulations, then the means of manipulation will not really be reduced, and Bitcoin whales in other parts of the world will still get unethical benefits. The only way to truly regulate cryptocurrency is to require the cooperation of almost all major governments in the world, but this is almost impossible to achieve.
Therefore, Bitcoin ETFs will be subject to the investment actions of some Bitcoin giant whales. Individuals with tens of billions of dollars can easily manipulate institutional investors and retirement funds through position adjustments. This will not only cause huge losses to retail and institutional investors, but also create an atmosphere of mistrust in Bitcoin, and may discourage some investors. If someone puts 5% of the pension fund into Bitcoin and then watches it plummet due to price manipulation, this is enough to make any investor cautious about it or even decide to abandon it altogether.
Some people might argue that anyone who invests in a Bitcoin ETF should be aware of the risks, and that any losses incurred should be borne by themselves. Although this seems reasonable, it completely defeats the purpose of the SEC and raises the question of why we do not allow all forms of manipulation in the stock market. Any manipulation will cause prices to fluctuate in a way that cannot represent the true value of the asset. This makes it extremely difficult to make profitable investments, even for the most risk-averse.
As long as the cryptocurrency market becomes more mature, the United States will be ready for Bitcoin ETFs. Once there is enough money in the market to dilute the assets held by the whales so that they cannot affect the price, or the value of the assets they hold increases to the point that they can no longer bet on the risk of losing a large amount of capital, once the conditions are sufficiently mature, these manipulators will Lose power. Only in this way will it make sense for ETFs and a large amount of institutional funds to flood the crypto market. Until then, retail investors and impatient institutions can use existing tools to join the cryptocurrency revolution, wait for the ecosystem to become stronger, withstand huge price fluctuations, and then benefit from early adopters.