The Wild West
The price of bitcoin has returned to near record highs of around $64,000 on news that the US Securities and Exchange Commission has given the green light to “the first widely available investment funds” to track the cryptocurrency, said Kellie Mejdrich on Politico. Three bitcoin futures exchange-traded funds (ETFs) are to go live this month, including one pitched by ProShares, which began trading on the New York Stock Exchange on Tuesday. This is “a landmark moment” for the booming crypto market: the new funds address growing demand from mainstream investors for exposure to an asset that has risen 440% in a year. But bitcoin’s entry into the investment establishment is fraught with controversy. SEC chair Gary Gensler, who once described the crypto market as the “Wild West”, is now under fire from investor advocates for exposing individuals to financial danger.
Bitcoin critics such as Peter Schiff – the CEO of Euro Pacific Capital who doubles as a financial commentator and radio personality – are up in arms, said Jeffrey Gogo on Beincrypto.com. Schiff reckons the SEC deserves to be “abolished” for approving these ETFs. “My beef is that bitcoin pumpers will now use the approval to sucker in more buyers based on the government’s supposed endorsement,” he said. Punters certainly seem to like the look of the ProShares product, said Tanaya Macheel on CNBC. Shares in the fund (which tracks contracts speculating on the future price of bitcoin, rather than the crypto itself) rose 4.8% on their debut. Encouraging news for Invesco, which plans a similar product.
Barometer of exuberance
The euphoria may not last, said John Detrixhe on Quartz. Indeed, “if history is any guide”, this launch “could mark a peak” in bitcoin’s recent ascendancy. Past events that were seen as legitimising crypto – such as the listing of the Coinbase exchange in April – “turned out to be high-water marks”. Ultimately, bitcoin isn’t nearly as “uncorrelated” with stock markets as its boosters claim, said Lex in the FT. The price “roughly halved” last year when the S&P 500 “fell by a third”. Bitcoin is “a good barometer of exuberance”. But it’s a moot point how it would fare in “a prolonged bear market”.