Growing ETFs could manipulate Bitcoin supply and price, experts worry
Exchange Traded Funds (ETFs) remained one of the most popular methods of trading the asset class. After the emergence of the first cryptocurrency bitcoin (BTC), it also received the same treatment as it was widely accepted. Bitcoin ETFs are considered an efficient way to invest in the asset without direct exposure.
In 2017, the US global market company CME Group launched its first Bitcoin futures. At the time, Leo Melamed, chairman emeritus of the firm claimed that it tamed Bitcoin (BTC). He said the firm would regulate bitcoin, and refrain from going wild. He assured to regulate the best cryptocurrency as a regular trading instrument with rules.
The ETFs enable investors to invest in an asset as it tracks the price of a concerned asset, in the case of a bitcoin ETF, it tracks the bitcoin price. The regime does not require direct ownership of the asset by the investor. The SEC remained responsible for policing this sector of the market.
Increasing number of ETFs in the US
The US Securities and Exchange Commission has approved a number of ETFs in the coming years. Increasing bitcoin (BTC) supply in the form of paper bitcoin sales raised the concerns of market manipulation.
In October 2021, the US SEC approved the first Bitcoin futures ETF. Proshares Bitcoin Strategy brought exchange traded fund and launched it on the New York Stock Exchange. This was the first ever Bitcoin ETF in the region.
On the first day of its trading, it witnessed a total trade worth USD 1 billion. In the following month after the launch of ETFs, Bitcoin (BTC) reached its all time high by reaching more than 69,000 USD.
ETFs were a familiar concept within the traditional markets such as gold markets. Experts say these funds are also being used for the latest price discovery. Bitcoin ETF markets are also said to follow a similar regime to the other markets.
Concerns About Bitcoin ETFs
However, several experts and observers have registered their concerns regarding the purpose of paper bitcoin (BTC) is to manipulate the asset with the agency’s help.
CEO of Crypto Exchange EXMO, Serhii Zhdanow, said there is a need for scrutiny of the paper bitcoin. Given the risk posed by the asset class, the manipulation could act as a serious threat to cryptos as well as their listed versions.
Prominent crypto YouTuber James Crypto Guru believes that the market manipulation to drive the bitcoin price is witnessing a near-term decline. Although on the flip side it would work very well for long term adoption.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional money exchange systems. She is also fascinated by the blockchain technology and its function.
