Bitcoin's Wild June Is ‘Slam Dunk’ Against Crypto ETF Approval
The U.S. regulator has so far refused to allow funds to list; ‘unnatural volatility’ boosts that stance, says Arca’s Dorman.
Crypto enthusiasts weren’t the only ones watching Bitcoin’s meteoric ascent last month.
The likelihood of a Bitcoin exchange-traded fund gaining approval from the U.S. regulator has declined thanks to the cryptocurrency’s wild price swings in June, Jeff Dorman, chief investment officer at Arca, wrote in a July 1 research note.
The Securities and Exchange Commission has already shot down several ETF proposals, including one from the Winklevoss twins, citing concerns over market manipulation in cryptocurrency markets.
Bitcoin’s price rose nearly 50% last month through June 26, only to slide about 20%.
Those gyrations were fueled by unregulated exchanges letting users borrow 100 times more than they put down, Dorman wrote, describing it as “unnatural volatility caused by excessive leverage and outsized risk-taking.”
“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,” he wrote.
Copyright 2021 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.