The long expected Bitcoin ETF is rejected by the SEC
The SEC has decided that the Bitcoin ETF of the Winklevoss twins is not allowed to be brought to the market. According to the SEC, the risk of fraud is to high. The existence of an Bitcoin ETF on Wall Street should make it way easier for investors to invest in bitcoin. This should give them a easy way to open a position on their regular broker account.
Furthermore an official Bitcoin ETF would be very positive for the reputation of bitcoin, it will be seen as a sign of acceptation of bitcoin in the financial world. The expectation was that when the ETF could proceed, the price would have skyrocketed. So after the rejection the bitcoin price made a huge drop. Good moment to buy?
The rejection of the Bitcoin ETF can also be positive
The short time effect of the rejection on the Bitcoin price is negative. However for the long term it can be good for Bitcoin. The existence of multiple Bitcoin ETF’s on Wallstreet could cause dilution because of fractional reserve practicing, done by financial institutions. While the Bitcoin protocol itself contains a strict regulation of supply.
This will happen when financial products based on Bitcoin are created, and are not for 100% backed by real bitcoins. The bitcoin price is naturally based on demand and supply. When financial institutions start creating products based on bitcoin, the chance for price manipulation will increase dramatically. This can lead to an false low price, caused by uncovered bitcoin assets that are flooding the markets.
Another result of the rejection of the ETF is that investors have to choose for the classic way to store bitcoins. This will motivate the Bitcoin community to design applications and improve the network to make storage and usage of bitcoin easier and more secure.
It is possible to invest easy and secure in bitcoin without ETF
The rejection of the ETF isn’t saying anything about the potential of bitcoin at all. Bitcoin is still the only really secure network that is based on blockchain. In the .com crash and the crisis of 2008, we have learned that all financial institutions in the USA are covering each other. The banks see Bitcoin as a huge threat, so they want to keep it as small as possible. The question is if the SEC really made an objective decision.
When you want to invest in bitcoin, you can do this easily and secure by ordering an hardware wallet (from only 15 Euro). After you can buy bitcoin on an online exchange or marketplace. A bitcoin is devisable in 100 million units, so you can also buy a small amount. When you buy now on the low, you are investing before all the big institutions are coming in. The potential is enormous!