Whats wrong with cryptocurrencies at the moment?

All the hype about cryptocurrency events in September and the market was sucked in. I for one was one of those looking forward to the opening of Binance US, the Bakkt Futures ICE debut and the VanEck/SolidX ETF decision. All of those events seemed to have fallen flat on their face!

Don't get me wrong there is still time for all of them to transpire but September seemed like such a promising month for the crypto community.

There was some good news from the VanEck - SolidX ETF. They managed to get through the SEC bylaws and offer a subscription to a privileged few select funds. The community was disappointed as the VanEck/SolidX Bitcoin ETF was generally perceived as the strongest contestant to get regulatory permission and they pulled it from contention.

This story was full of ups and downs as originally the proposals were made independently and after being rejected the two sides came together. In August last year, the SEC postponed its decision on the listing of the VanEck–SolidX ETF for the first time, citing the unregulated nature of Bitcoin market. This seemed odd as there are many OTC products with ETF's including oil, base metals and other major commodities that need no regulatory approval to be traded between companies. 

Then in December, the decision was delayed again, this time it was due to more administerial problems as there was a government shut down and a few other smaller issues. 

Finally, VanEck and SolidX resubmitted their proposal, making it approximately 40 pages longer and still, in March, May and later in August the SEC delayed its decision. The commission requested more answers to questions in relation to providing protection for investors and public interest from fraud and similar exploitations.

So that brings us today when VanEck and SolidX started to offer a limited version of their Bitcoin ETF to institutional investors. There were some stipulations to the offering as only institutional investors with more than USD 100 million on their books could subscribe.

Ed Lopez, head of ETF product with VanEck, confirmed that “this action doesn’t mean VanEck has given up on its pursuit of a public bitcoin offering and he added:

“We still believe investors would be better served having access to bitcoin through a regulated public vehicle. Given the current nature of the regulatory environment, withdrawal of the filing allows us more time to enhance the filing to help better address the concerns of regulators.”

So that is the end of that for now. The next big issue for the crypto community is the poor start to the Bakkt futures offering at the Intercontinental Exchange. It's hard to say why the volume has been so low. Maybe because it has come at a time when the BTC price is soo subdued but it has not lived up to all the hype. 

Today has been better as over 64 contracts have been traded on the monthly contract rather than the 47 or so the day before. Compare this the CME contract in which in their first 13 hours traded 751 contracts worth 5 Bitcoins each.

I personally think the contract will catch on as the psychical delivery of the product really enhances the security. I just feel that the institutions need to get on board more to increase the volume. Coinbase and Binance already own the retail market but this is the first product that is good to go for hedge funds and banks. One concern is the fact that the price is tracked and aggregated but forces beyond their control and knowledge base. They cannot or do not know how to get all of the flow data from all the exchanges yet and one that is available maybe we will see greater adoption. Lastly, the finance world has massive geopolitical issues to deal with right now. The Democrats are looking to impeach US President Trump. In the UK parliament are trying to force out UK PM Johnson and to top it off there is a dollar shortage. The launch of Bakkt Futures could not have come at a more complex time. Let's be patient and judge the performance over the coming months as at the moment its too early to call it a failure. 

 

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