- Cryptocurrencies are waiting for an imminent decision on another ETF request.
- The reactions are different in three different scenarios and for each of the three top coins.
We have already learned that cryptocurrency prices depend primarily on one thing: will there or won’t there be a Bitcoin ETF? An Exchange Traded Fund facilitates the entrance of mainstream money into cryptocurrencies and that is why prices rise with higher chances of an approval and fall on a rejection or a delay of a decision by the SEC.
The upcoming decision’s deadline is August 23rd, deep in the summer holidays for some, but not for crypto traders. The SEC will rule on the fate of the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF. Both ETF’s are tied to Bitcoin futures rather than the digital currency itself. The first fund allows investing in rising prices of the grandaddy of coins while the latter is for betting on the fall of prices.
Tying the ETF to futures is a substantial difference from the other requests which are based on the real thing. Nevertheless, an approval would be a first crack in the closed door for crypto ETF’s.
Here are three scenarios for the decision and the reactions.
1) Approval
A first break of the Crypto ETF glass ceiling would be great news for cryptocurrencies and their prices would rise. Bitcoin would be the primary beneficiary as the ETF is tied only to this coin and not to others. And prices would rise even as the other ETF allows betting against the price of the BTC/USD.
It would also affect the futures market. Ethereum, Ripple, and others may also want to first have futures on the coins as the first step towards an ETF. In any case, the good news is good news for everybody.
2) Delay
A delay has hurt cryptocurrencies many times in the recent past. The reaction would be no different, but the drop may be somewhat muted as this ETF request is not as high profile – not tied directly to Bitcoin.
Another potential characteristic is that the drops may not only be limited but also uniform: rejecting a request that is only related to Bitcoin futures may see all cryptos sliding together, and just a bit.
3) Rejection
Rejections have also been commonplace and have sent prices lower. In this case, Bitcoin will likely be hit the hardest and as it may prove that the top coin has no advantage. It will demonstrate that having a futures market does not mean a higher level of maturity.
In case of a rejection, the focus will swiftly return to the pending decisions on high profile ETF’s due on September 21st and September 30th.