swing trading

What's Going on with Bitcoin? 

Increasing volatility and the future of bitcoin.

| Swing Alpha on 7 Mar 2017 12:00 AM

For the first time ever, bitcoin was worth more than gold, as of the 3rd of March. This comes to no surprise, as bitcoin has been growing steadily over the last couple of months. It seemed like the like perfect investment, with a growth of a 62.8% over the last 45 days.

This was until bitcoin crashed, shortly after they overtook the gold price. The price was highly volatile, between 1280$ and 1170$. What caused this?
1) Measures of the Chinese bank which regulate bitcoin trade wouldn’t be as temporary as  they initially announced.
2) There was little confidence for a positive result of the US stock market watchdog SEC with regards to the approval of the exchange-traded funds on the bitcoin. Coindesk knows that one of the larger investors in the bitcoinbusiness, Global Advisors Bitcoin Investment Fund, estimates that the chances of approval of the ETF by the brothers Winklevoss (= one of the three ETFs, is approximately 25 percent.

On the 10th of March bitcoin crashed from 1280 to 1000 dollars due to the American SEC denying the ETF.

At least there is some good news for bitcoin, coming from Texas. They recently set up an amendment on the Texan constitution. Article one of the amendment states clearly that:

‘”(...) the right of the people to own, hold, and use a mutually agreed-upon medium of exchange, zoals cash, coin, bullion, digital currency, or scrip When trading and contracting for goods and services Shall not Be Infringed. No government Shall prohibit or encumber the ownership or holding company or any form or amount of money or other currency. “ In addition to a shiny weapon in the holster, the Texan citizen therefore has the right to the free (= not imposed by the government) choice of payment. If the amendment is adopted and approved by the voters of course. First, the view of the SEC, then, so that after Saturday - just maybe - for the time being come to an end the speculation surrounding the nervous Bitcoin.”

This gives the right to any Texan to use of any payment method. This is, if the amendment will be accepted and approved by its citizens.

The future of Bitcoin ETF?

Most analysts agree that Bitcoin ETF is not a necessity, in order for Bitcoin to keep growing. However, the SEC believes that Bitcoin markets will eventually develop over time and the SEC is willing to approve future ETFs if theyh comply witht he requirements of the Exchange Act.

Even though bitcoin has not been granted an ETF, SolidX Bitcoin ETF is still under consideration of the SEC. If SolidX manages to figure out the reason of the failure of Winklevoss twin Bitcoin ETF and use that to get an approval, Bitcoin could see an introduction of a Bitcoin ETF soon.

The reason SEC did not approve the ETF’s is revolved around unregulated OTC markets, which is a huge compromise for Bitcoin’s security to push for the approval of the ETF. Bitcoin has mainly been popular due to its safety, security and untraceability.

In its official statement, the SEC wrote:

“As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter.”

The major part of the announcement of the SEC is focused on the tracking and surveillance sharing agreements. SEC will only approve the ETF if the commission had full certainty that the exchange traded funds of the ETF can be surveilled and tracked without any obstacles.

“First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated,” the document read.

Bitcoins security expert Andreas Antonopoulos wrote as a response:

Jerry Brito, Bitcoin non-profit research and Coin Center executive director, also stated:

 “The Winklevoss ETF proposal was rejected because the SEC found that the significant markets for Bitcoin tend to be unregulated overseas markets that are potentially subject to price manipulation. But this creates a chicken and egg problem. How do we develop well-capitalized and regulated markets in the US and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like Bitcoin?”


Bitcoin will not need an ETF to stay successful and maintain a steady growth. However, an ETF will definitely help. While still awaiting results from the twin, SolidX, speculations should not be made. By doing the needed research, SolidX might be able to get an ETF. Otherwise, SEC stated that that in the future, Bitcoin will eventually be able to get an ETF if they meet specific requirements.

3 Mar 2017 4:38 PM | Anonymous

Copyright © 2017 Swing Alpha, LLC