Growing ETFs Might Manipulate the Bitcoin Supply and Price, Experts’ Concerns

Exchange Traded Funds (ETFs) remained one among the most popular methods of trading the assets class. Following the emergence of the first cryptocurrency bitcoin (BTC), it also got the same treatment as it was widely accepted. Bitcoin ETFs are deemed as an effective way to invest in the asset without a direct exposure.

In 2017, American global markets company CME Group launched its first Bitcoin futures. At the time, Leo Melamed, Chairman Emeritus of the firm claimed it as taming Bitcoin (BTC). He said that the firm would regulate bitcoin, abstaining it from getting wilder. He assured to regulate the top cryptocurrency as a regular trade instrument with rules. 

The ETFs enable investors to make investment into an asset, as it tracks the price of a concerned asset, in the case of a bitcoin ETF, it tracks bitcoin price. The regime does not demand direct ownership of the asset by the investor. The SEC remained responsible to keep watch over this sector of the market. 

Growing Number of ETFs in the US

The US Securities and Exchange Commission has approved a number of ETFs in upcoming years. Increasing bitcoin (BTC) supply in the form of paper bitcoin selling raised the concerns of market manipulation. 

In October 2021, the US SEC approved the first Bitcoin futures ETF. Proshares Bitcoin Strategy brought the exchange traded fund and launched it on the New York Stock Exchange. This was the first Bitcoin ETF ever within the region. 

On the first day of its trading, it witnessed an overall 1 billion USD worth trade. In the following month of ETFs launch, Bitcoin (BTC) attained its all time high by reaching more than 69,000 USD. 

ETFs were a known concept within the traditional markets like gold markets. Experts say these funds are also used for the latest price discovery. Bitcoin ETF markets are also said to follow a similar regime like the other markets. 

Concerns Around Bitcoin ETFs

Several experts and observers, however, have registered their concerns regarding the intent of paper bitcoin (BTC) is to manipulate the asset with the agency’s help. 

Crypto exchange EXMO CEO, Serhii Zhdanow said that there is need for scrutiny over the paper bitcoin. Given the risk posed by the asset class, the manipulation could act as a severe threat for crypto as well as their publicly traded versions. 

Prominent crypto YouTuber James Crypto Guru believes that the market manipulation to make bitcoin price witness a decline in the short term. Although, on the flip side, it would act very good for adoption in the long term. 

Nancy J. Allen
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