A U.S. Bitcoin ETF seemed just as far away as ever Monday when news emerged that the U.S. Securities and Exchange Commission (SEC) had postponed its decision on whether to grant Cboe/VanEck/SolidX a license to operate a Bitcoin ETF. This development came just days after BitWise had their ETF application rejected, and is another episode in the years-long saga of the mythical Bitcoin ETF. However, this latest piece of negative ETF-related news was barely noticed by the crypto community, with minimal, if any, impact on the price, leading to the suggestion that ETF mania may be on the wane.
Bitcoin ETF’s Wild Summer
Last summer, Bitcoin ETF fever was rife among the crypto community, with stories abound of how the Cboe/VanEck/SolidX was the best chance Bitcoin had of gaining an ETF, the result of which would send us back to all-time highs and end the then six-month-old bear market. Yet, news of a postponement on August 8 sent the price crashing 10% and wiped $14 billion off its market cap, while a further postponement came on December 7 and saw another 11% shaved off the value, reflecting just how much store had been put in the ETF being granted.
Given these reactions you’d have been forgiven for thinking that the ETF was the be all and end all for Bitcoin enthusiasts, but an interesting pattern has emerged this year. In January, the Cboe withdrew the Bitcoin ETF filing completely, but this caused barely a flicker on the Bitcoin needle. Similarly, when it re-applied just days later, there was once again no reaction. And where two postponements saw an average of a 10.5% drop in 2018, ten months later you could be forgiven for missing the news altogether, such was the minimal impact. Quite a departure from 2018 when you couldn’t move for ETF gossip and predictions.
Delay, Delay, Reject…Repeat
So, what has happened to the ETF’s ability to move markets? The reasons for this reduced impact may vary, with no one single explanation credible in totality. Firstly, in 2018 the market was in the grip of a downward spiral, and many looked to an ETF to spike Bitcoin’s price and allow them to dig themselves out of a hole and recoup their losses. With a market now suddenly more buoyant, investors are not so dependent on artificial crutches to help propel the market sentiment and price action.
Secondly, an ETF fitted nicely with the ‘institutional money’ meme that was gaining traction in 2018, allowing many to see an ETF as the final piece of the puzzle in terms of big money getting into Bitcoin after such a rise to prominence the year before. Finally, it may be because people are either bored or have simply given up thinking an ETF will ever be approved. The pattern of delay, delay, reject has played out with every single Bitcoin ETF application to date, and there’s only so many times investors can get their hopes dashed before they start to get fed up. Following this pattern to its logical conclusion would mean that, assuming it does eventually get approved, it will happen when least expected.
The next deadline for the Cboe/VanEck/SolidX ETF application is August 19, although this can be pushed as far back as October 18, by which time it will be interesting to see what position the market is in and, therefore, how many people are left to care about it.