Bitcoin’s wild ride over the last two weeks is a nail in the coffin for any SEC-regulated Bitcoin exchange-traded fund, according to a crypto insider.
The world’s largest cryptocurrency peaked around $13,750 on June 26th and is now trading at $10,707 at time of writing. In a July 1st report to clients, Jeff Dorman, chief investment officer at Arca Investment Management Firm, writes that BTC’s extreme volatility undercuts the type of fundamentals the US Securities and Exchange Commission needs to approve a Bitcoin ETF.
“Leverage requires collateral, but it’s virtually impossible to keep all of your crypto collateral in one place, which means it’s very easy to get liquidated on the upswing and downswing even if your total assets easily cover your capital calls. Further, it’s almost a slam dunk now that an ETF won’t be approved any time soon, as an 81% 14-day levered rally, most of which occurred after U.S. trading hours, is not exactly the formula for successful SEC approval.”
Dorman, a veteran trader and portfolio manager on Wall Street, says he’s still bullish on the cryptocurrency market and calls out Chainlink, VeChain and NEO as notable movers and shakers. For Bitcoin, he pinpoints the upside for investors who bought BTC outside of 2017’s big bull run that pushed its price to nearly $20,000.
“There have only been 75 days in Bitcoin’s history where BTC traded above where it is currently trading.
That means, unless you bought Bitcoin from December 2, 2017 to February 10, 2018 (or a few days in March 2018), you now have a gain on your investment in USD terms. Let that sink in before moving on.”
Dorman tells his Twitter followers,
“Bitcoin has transcended crypto and is now in mainstream media, economics, finance and politics. There is no denying its importance, and while it may still fail, it is miles ahead of the pack.”
Despite supporters, the SEC has yet to approve any Bitcoin ETF proposals, rejecting applications from the Winklevoss twins, VanEck and Bitwise, among others. The regulator has consistently highlighted concerns over the market’s susceptibility to volatility, manipulation and security issues that have played out in a number of exchange hacks.
You can check out the full report here.