Bitcoin, along with many other major cryptocurrencies, continues to grapple with extreme volatility — and at a time when investors were hoping bitcoin might have reached a better level of maturity.
The bitcoin price has bounced from highs of $8,500 to lows of $5,800 over the last three months, not to mention the 70% drop in the bitcoin price since December last year, and has caused many recent investors to despair.
Bitcoin has swung from under $6,000 this week to around $6,500 and has intraday changes well into the hundreds of dollars — far beyond the vast majority of the world’s currencies and traded commodities (with some exceptions, of course).
Earlier this month the U.S. Securities and Exchange Commission (SEC) delayed its decision on a proposed bitcoin exchange-traded fund to the end of September — something many investors were banking on to bring a fresh wave of investment to the world of bitcoin and cryptocurrencies.
The decision sparked a bitcoin and wider crypto sell-off and suggests the SEC still has concerns around bitcoin’s volatility and possible price manipulation in the largely unregulated cryptocurrency market.
In January the SEC questioned how bitcoin’s volatility and potential illiquidity would fit with funds that must calculate a fair market price for their portfolio at the end of every trading day and allow investors to easily cash out their shares.
“Until the questions identified above can be addressed satisfactorily, we do not believe that it is appropriate for fund sponsors to initiate registration of funds that intend to invest substantially in cryptocurrency and related products,” the SEC’s director of investment management Dalia Blass said.
Those that have brought the latest closely-watched bid have been working hard to lay these fears to rest, but recent price swings — as well as reports into price manipulation through the cryptocurrency tether — could still be weighing on regulators minds.
There’s hope that this time could be different, however. Chris Concannon, Chicago Board Options Exchange (CBOE) president and chief executive, recently said that he is optimistic the SEC will approve the bid, though he recognizes there are challenges remaining.
If the SEC accepts the proposed rule change to allow bitcoin shares to be traded through an ETF, a request made by the CBOE in conjunction with money management firm VanEck and crypto startup SolidX, then there could very soon be a way for investors to buy into bitcoin without having to navigate often clunky bitcoin exchanges.
The SEC is in fact set to make final decisions on a total of nine proposed bitcoin ETFs in the next two months as demand for ways to invest in bitcoin increases and the CBOE and fellow Chicago exchange CME Group both began offering bitcoin futures contracts in December, the first significant bitcoin entries into mainstream finance.
Meanwhile, earlier this week it was reported an exchange-traded note (ETN) — called the Bitcoin Tracker One which has been trading on the Nasdaq Stockholm exchange since 2015 — recently started quoting in U.S. dollars, and the bitcoin-based, dollar-denominated security is now available for trading under the ticker CXBTF.