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Crypto Long & Short: No, Bitcoin Is Not in a Bubble

Commentators and analysts who say bitcoin is in a “bubble” show they don’t understand what the term means.




To think that such a festive concept, one that evokes both sophistication and childlike wonder, could become so financially charged …

Last week, Bank of America Securities chief investment strategist Michael Hartnett said in a note that bitcoin looks like “the mother of all bubbles.”

Harnett seems to be using the strength and speed of bitcoin’s price rise as the base for his diagnosis, as if that is the main feature of a financial bubble. It isn’t.

Continuing the misuse of the word, in a note quoted on Bloomberg this week, investment management firm Man Group said: “Every time a bitcoin bubble bursts, another grows back to replace it … This very frequency makes the bitcoin narrative somewhat atypical relative to the great bubbles of the past.”

This is less irritating in that Man Group recognizes that bitcoin is “atypical” – but it also seems to believe that bitcoin is a bubble. It’s not.

Words matter

To see why, let’s pull out our financial dictionaries:  

Investopedia: “During a bubble, assets typically trade at a price, or within a price range, that greatly exceeds the asset’s intrinsic value (the price does not align with the fundamentals of the asset).”

Nasdaq: “A market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset.”

Wikipedia: “A situation in which asset prices appear to be based on implausible or inconsistent views about the future. It could also be described as [an asset that trades] at a price or price range that strongly exceeds the asset’s intrinsic value.”

Do you see the common thread? An asset is in a bubble when its price increase is unrelated to its intrinsic or fundamental value.

What is bitcoin’s intrinsic value? Nobody yet knows. We’re looking at a still young technology that is evolving alongside the demand for it. The technology’s future use cases are still unclear, as is its place in the financial ecosystem. And bitcoin’s unique investment characteristics and unfamiliar metrics make it impossible to apply traditional valuation techniques. Many have opinions as to its fundamental value, but you only need to look at the wide range to realize they are based on unestablished theories and untested logic.

So, anyone saying that bitcoin is in a “bubble” is making a judgement call on its intrinsic value. But they never (not that I’ve seen, anyway) share their calculations or even reveal the number that they’re thinking of.

Social concepts

Maybe these analysts and commentators are using the term “bubble” in the social sense?

Economist Robert Schiller defines a speculative bubble as a “social epidemic whose contagion is mediated by price movements.” Those of us that spend time on Twitter or YouTube may be nodding in recognition. But Schiller specifies “epidemic” (an unfortunate metaphor in 2020-21), which implies mainstream participation. The cacophony of bitcoin maximalists and altcoin enthusiasts is far from mainstream.

AQR Capital Management co-founder Cliff Asness gets it. In a 2014 paper written for the CFA Institute, he said: “The word ‘bubble,’ even if you are not an efficient market fan (if you are, it should never be uttered outside the tub), is very overused.”

Suds aside, he goes on to add: “Whether a particular instance is a bubble will never be objective; we will always have disagreement ex ante and even ex post. But to have content, the term bubble should indicate a price that no reasonable future outcome can justify.” (my emphasis)

Most professional investors allocating part of their portfolios to bitcoin are doing so to hedge against the scenario of currency debasement, which seems less and less unreasonable. How do you put a price on that?

What is the “fundamental value” of a good that does not fall in value along with the underlying currency, that does not suffer the consequences of a weak economy, and that cannot be co-opted to provide profit for a select and powerful few? What is the “intrinsic value” of a technology that also allows for the auditable, immutable and censorship-resistant sharing of information? How do you assign a baseline price level to a cryptographic token that embodies all of this, and can also be used as a payment innovation as well as a seizure-resistant emergent store of value?

For bitcoin to be in a bubble, its price movements need to be unrelated to its underlying value. Given the astonishing increase in the global supply of dollars at a time of stagnating demand due to widespread pandemic-induced recessions, and the likely emergence of recovery-fueled inflation which will be difficult to control, it could be argued that bitcoin’s underlying value as a potential offset to the ensuing economic chaos is rapidly increasing. It could be argued that bitcoin’s price movements are catching up to its underlying value.

The anti-bubble

It could also be argued that bitcoin is the anti-bubble, that its price is going up because of bubbles elsewhere in the economy. Many investors are buying bitcoin in response to what they see as a massive sovereign bond bubble, which they believe the government will try to deflate by printing money.

And as for equities, the blistering market valuations of tech companies are to a large degree dependent on low interest rates which could head up fast should the bond bubble burst. This would make “alternatives” such as bitcoin even more attractive.

To get a feel for bitcoin’s anti-bubble nature, try to imagine what its “fundamental value” would be if we had central banks that did not print money, governments that kept balanced accounts and no fear at all of MMT, financial repression or any kind of populist uprisings. In this scenario, demand and price would be much lower than they are today.

So, before we accuse bitcoin of being in a bubble, before we imply that its current price in no way reflects its potential utility in a chaotic and increasingly uncertain world, let’s ask ourselves where we think the drivers of bitcoin’s utility are heading.

None of this means that bitcoin’s price won’t fall – it might, and if it does, it might do so quickly. The likelihood of that is for each investor to decide.

It does mean, however, that we need to examine more than just recent price movements. A strong return does not automatically deserve “bubble” designation. Bubbles are not about prices – they’re about price relative to value.

Labels matter, and what’s coming is going to be confusing enough without charged words misrepresenting new concepts.

– Noelle

Macro currents

When institutional investors praise the current macro environment as being “perfect” for bitcoin, we listen. After all, low rates, a declining dollar, and inflation fears cause investors to deploy low-yielding cash into higher-yielding assets such as gold and bitcoin. 

But do these investors go back to the drawing board when BTC plunges more than 20% just as the 10-year Treasury yield breaches 1%? I’m starting to question if the macro narrative of ongoing Fed support suppressing yields and boosting market speculation still holds.

Just like the Fed, investment managers care more about real yields (adjusted to remove the effects of inflation) rather than nominal yields. The fact that real yields are still negative means the inflation outlook is muted. The Fed will continue monetary easing until it sees a meaningful pickup in growth and inflation, which supports the base case for bitcoin as a speculative asset. 

And what about bitcoin as a hedge against inflation? 

Some might say there’s no evidence of inflation running wild just yet. But market participants would disagree as they position ahead of economic data. We can see this in breakeven rates (a market-based measure of inflation expectations) which exceeded 2% this week. 

Source: Federal Reserve Bank of St. Louis

(The above chart shows the US 10-year real yield struggling to chase inflation expectations higher, which should keep the Fed active – supporting the macro case for bitcoin. )

To be fair, volatility metrics such as Treasury swaption premiums show no hedging bias for a significant move higher or lower in rates. This means volatility in the rates market remains very low, suggesting that investors are not yet demanding greater reward for rising interest rate (or inflation) risk. 

So, where can investors find such a reward? Bitcoin. The cryptocurrency is attracting greater institutional flows because it yields high returns compared to traditional assets. Bitcoin’s high  relative return compensates investors for volatility and inflation risk. 

As long as the Fed keeps the punchbowl flowing, the speculative quest for high returns will continue. It’s a goldilocks environment for bitcoin as an asset class.

– Damanick

Chain Links

Investors talking:

· “We have been watching it for a longish time, and our judgement is that it is a unique beast as an emerging store of value, blending some of the benefits of technology and gold. Yes, it is a seemingly non-sensical asset – but one that makes absolute sense for how we see the world.” – excerpt from a beautifully written and thoughtful investor letter from Jonathan Ruffer, chairman of Ruffer Investment Company

· “Every time a Bitcoin bubble bursts, another grows back to replace it … This very frequency makes the Bitcoin narrative somewhat atypical relative to the great bubbles of the past.” – Man Group investment note

· “In our view, given their high volatility and the size of their past drawdowns, cryptocurrencies might be attractive to speculative investors, but they are neither a suitable alternative to safe-haven assets nor do they necessarily contribute to portfolio diversification.” – strategists at UBS Asset Management

· “I don’t even know enough to say this with confidence, but I will still say that I’m somewhat cynical that someone is going to come up with a really good valuation model for what the right price.” – Cliff Asness, co-founder of AQR Capital Management, in a Bloomberg interview

· Speaking on CNBC’s The Coin Rush on Tuesday, Goldman Sachs’ global head of commodities research, Jeff Currie, said the cryptocurrency market “is becoming more mature” but still has a way to go, and that he thought that approximately 1% of the current bitcoin market cap was attributable to institutional investors.

In his latest investor memo, Oak Tree Capital founder Howard Marks reveals that his son “thankfully owns a meaningful amount for our family.” He goes on to say: “In the case of cryptocurrencies, I probably allowed my pattern recognition around financial innovation and speculative market behavior – along with my natural conservatism – to produce my skeptical position. …  Thus, I’ve concluded (with Andrew’s help) that I’m not yet informed enough to form a firm view on cryptocurrencies.  In the spirit of open-mindedness, I’m striving to learn.”


According to sources, Goldman Sachs is considering launching a crypto custody service. TAKEAWAY: I remember back in the early days, we used to say that Goldman Sachs getting into the crypto business would be the tipping point for institutions. Years later, even with other significant legacy institutions already offering digital asset services, it would still be a very big deal, as it would be the strongest signal yet that Wall Street is interested. It would also trigger a scramble to catch up from other traditional financial institutions, and would incentivize professional fund managers to at least get better informed.  

This week, Reuters reported that the incoming Biden administration is expected to name Gary Gensler, a Washington and Wall Street veteran who has closely studied the cryptocurrency field, as chairman of the U.S. Securities and Exchange Commission. TAKEAWAY: This is very good news for the crypto industry. Gensler has experience in capital markets, academia and public administration. He served as chairman of the U.S. Commodity Futures Trading Commission (CFTC), as a key financial regulator for former President Obama, and in the Treasury Department during the Clinton administration. More recently, he taught a blockchain and crypto assets course at MIT, has spoken at several crypto conferences, and even penned an op-ed for us in 2019. Gensler sees blockchain as a “catalyst for change,” and seems to have a nuanced understanding of how crypto assets work and the impact they can have on capital markets. This nomination is likely to rekindle the market’s expectation that a bitcoin ETF will get approved this year.  (See former CFTC official Jeff Bandman’s take on the reported nomination here.)

Crypto custodian Anchorage has secured conditional approval for a national trust charter from the U.S. Office of the Comptroller of the Currency (OCC), making it the first national “digital asset bank” in the U.S. TAKEAWAY: The U.S. now has three crypto-native banks, up from precisely zero just a few months ago (crypto exchange Kraken was awarded a special purpose depository institution – SPDI – charter by the state of Wyoming last September, and crypto bank Avanti got one a month later). There are notable differences between the three that are worth pointing out. As a national trust, Anchorage cannot accept deposits, which means that it does not automatically get access to the Fed discount window and payment system. It does, however, make Anchorage a Qualified Custodian under U.S. Securities and Exchange Commission (SEC) rules, and adds another crypto piece to the regulated financial institution puzzle. The more “authorized” financial companies there are in the crypto industry, the greater the level of institutional trust.

New York-based crypto exchange Bakkt, backed by NYSE parent ICE, will become a publicly listed company via a merger with a special purpose acquisition company (SPAC) sponsored by Victory Park Capital. TAKEAWAY: The expected valuation is $2.1 billion, for a pre-product, pre-revenue business. According to a presentation by the Bakkt team to the SEC, the firm expects the size of the cryptocurrency market to reach $3 trillion in 2025 – in other words, it will more than triple in five years. 

Gemini Trust, the cryptocurrency exchange and custodian founded by twins Tyler and Cameron Winklevoss, could soon go public, according to a Bloomberg report. TAKEAWAY: It looks like 2020 will see a number of crypto market infrastructure companies go public. There’s Bakkt mentioned above, and other rumored possibilities are Coinbase, BlockFi, eToro, and I’m probably missing a couple. This is great news for us analysts, as we’re excited about getting a look at detailed financials for some of the largest platforms in the industry. It’s also good news for the industry, as these listings are likely to attract mainstream investor attention, as well as give investors an alternative path to cryptocurrency exposure.

Over $3 billion flowed into the products of crypto asset manager Grayscale Investments in Q4 2020, according to its latest report (Grayscale is owned by DCG, also the parent of CoinDesk). Over 90% of this came from institutional investors, mainly asset managers. TAKEAWAY: The report also showed that the Q4 inflows accounted for almost 60% of the year’s total, in spite of most of its funds being closed to new investment for the last 10 days of the year, which highlights the acceleration of institutional interest in crypto assets. Furthermore, the weight of institutional inflow in the mix was notably higher in Q4 vs. the year as a whole. Almost 90% of inflows went into the firm’s bitcoin trust GBTC.

Source: Grayscale Investments

Grayscale has reopened some of the funds it closed to new investment in December of last year, including the bitcoin trust (GBTC) and the digital large cap fund (GDLC). TAKEAWAY: Since Grayscale was responsible for much of the bitcoin purchases in the fourth quarter last year, the reopening could be taken as good news for the market – a buyer that had temporarily left is coming back in.


A prospectus for a new bitcoin exchange-traded fund (ETF) has been filed by Arxnovum Investments Inc. with the Ontario Securities Commission (OSC) in Canada. TAKEAWAY: With renewed attention on a potential bitcoin ETF approval in the U.S., the OSC’s actions here could set a precedent – a bitcoin ETF trading on a neighbouring stock exchange could kindle the competitive spirit and help the SEC realize that other jurisdictions are leading the way in financial innovation; on the other hand, a rejection by the OSC could send a signal to the SEC that there’s no hurry.

3iq Corp’s bitcoin fund, listed as QBTC.U on the Toronto Stock Exchange, has reached over CA$1 billion (US$785 million) in market capitalization. TAKEAWAY: This level of growth in an exchange-trade fund that was originally listed in Toronto in April of last year, and on the Gibraltar Stock Exchange in September, underscores the demand for listed bitcoin vehicles.

The bitcoin exchange-traded product BTCE, which started trading on Deutsche Börse’s Xetra exchange in June 2020, now also trades on Swiss stock exchange SIX. TAKEAWAY: The Financial Times reported this week that, BTCE’s daily trading volumes on Xetra averaged €57 million in the first 11 days of January, up from a daily average in December of €15.5 million, which points to surging demand in Europe for listed bitcoin products. The SIX listing takes the number of ETPs trading on the Swiss exchange up to 34, and, according to the exchange, turnover in cryptocurrency products reached CHF 1.1 billion ($1.24 billion) in 2020. This is still tiny in the overall picture (the exchange reported 2020 turnover of over CHF 1.7 trillion, or almost $2 trillion), but if BTCE’s trend on Xetra is anything to go by, that figure is likely to substantially higher in 2021.

The number of financial advisers allocating crypto to client portfolios reached almost 10% in 2020, an increase of almost 50% compared to 2019. TAKEAWAY: This is according to a recent survey carried out by crypto fund manager Bitwise and financial media site ETF Trends (you can see the full report on our Research Hub), which got input from almost 1,000 registered financial advisers. 81% of whom reported that they had received a question from a client about crypto in the past 12 months. This highlights the imperative for financial advisers to at least be able to answer questions about crypto assets – they are doing a disservice to their clients if they can’t, and dismissing something because it’s not easy to understand goes against the ethics of the profession.

Crypto trading platform CrossTower is launching a capital markets desk for institutional clients. TAKEAWAY: This encapsulates two trends we’ve been seeing build up over the past year: 1) the emergence of institutional-grade crypto market services, which widens choice and deepens the comfort level of institutional investors in the crypto markets, and 2) the bundling of crypto-related services and the gradual consolidation of the industry into a few firms that do many things, prime broker-style. Expanding from its spot exchange and over-the-counter (OTC) trading desk, CrossTower now offers digital asset lending, trade financing, structured products and trade execution across multiple venues.

Digital asset manager NYDIG – which earlier this week announced the acquisition of crypto data firm Digital Assets Data – is partnering with banking technology provider Moven to offer plugins for banks that want to launch bitcoin products. TAKEAWAY: This is yet another indication that traditional financial institutions are gearing up to enter the crypto asset market, either through custody services, trading platforms, payments or a combination thereof. In an online survey of more than 2,000 U.S. consumers shared exclusively with CoinDesk, NYDIG found that 80% of bitcoin holders would move their crypto to a bank if it had secure storage. Of those same holders, 71% would switch their primary bank account if a bank offered bitcoin-related products and 81% would be interested in buying bitcoin through their bank.

Asset management firm Arca has closed a $10 million Series A round of funding led by RRE Ventures. TAKEAWAY: Arca is one of the more innovative crypto fund managers in the industry. Not only does it manage its crypto fund, but it is also pushing the envelope in terms of financial products and fund management. In 2019, it filed a prospectus with the Securities and Exchange Commission (SEC) Friday for a bond fund whose shares would be tokenized on the ethereum blockchain. In 2020, it championed the concept of “tokenholder activism,” pushing decentralized exchange and prediction market platform Gnosis to stick to its original mission or return funds to investors. It will be interesting to see what it does with the funds raised in the latest round.

This report by Bloomberg on the Arctic’s first bitcoin mining facility not only has gorgeous photos; it also reminds us that bitcoin does not just exist in cyberspace, and it is not a pure technology play. It has an industrial side, too. TAKEAWAY: The report also reminds us that the heavy power consumption of bitcoin mining is not an industry-killer, as many early critics insisted it would be.

Speaking of mining, Minnesota-based Compute North and New York-based Foundry Digital (owned by DCG, also the parent of CoinDesk) have partnered to provide a “turnkey” hosted mining solution which allows investors to purchase hosted machines through either company. TAKEAWAY: This is a step towards turning bitcoin mining into an investment option with fewer barriers (such as finding a location, buying the machines, etc.). It could also serve as the basis for other types of financial products, such as mining-based collateral and hedging derivatives. Crypto investing is not just about buying an asset and watching the price move.

Babel Finance is letting bitcoin mining firms put up their machines as loan collateral in exchange for significantly better lending terms than those offered for crypto asset collateral. TAKEAWAY: This offers a glimpse at the growing sophistication of the mining industry in China, and the emergence of leveraged operations. On the one hand, more leverage means more risk. On the other hand, leverage will allow for faster industry growth, which leads to even more secure blockchain networks, which leads to more financial inflows, and so on in a virtuous circle.

The venture arm of U.S. cryptocurrency exchange Coinbase participated in the seed round of mining software and services company Titan, which in December announced what will reportedly be the first enterprise-grade bitcoin mining pool in North America. TAKEAWAY: This echoes the trend mentioned above of crypto mining facilities being packaged as investment opportunities, and Coinbase’s endorsement of the potential makes it an even more intriguing area to watch.

Las Vegas-based bitcoin mining company Marathon Patent Group (MARA) has entered into a securities purchase agreement with institutional investors for the registered offering of 12.5 million shares of common stock at $20 per share, to raise $250 million. TAKEAWAY: CEO Merrick Okamoto told CoinDesk in an email he intends to use the funds to, among other things, purchase more mining machines and expand facilities amid the ongoing “arms race” as manufacturers struggle to keep pace with demand. The increased activity in “mining as a business” is largely attributable to the rising bitcoin price, which directly affects mining profitability. It also has to do with the growing sophistication we mentioned above, with advances in mining technology that are impacting the economics, and with the growing global competition, which is good for the industry as a whole.

Panama-based crypto derivatives exchange Deribit, the largest options exchange in the industry, has already recorded approximately 25% of last year’s entire bitcoin options trading volume. TAKEAWAY: This is astonishing growth that underlines the market’s growing maturity. The growth is not limited to Deribit, although it is consolidating its position as segment leader. Open interest (OI) across all crypto options exchanges has exploded from just over $520 million a year ago (16% of the OI of bitcoin futures) to over $8.3 billion (66% of the OI of bitcoin futures!) today.


Bitcoin miners selling their holdings is often used to explain market dips, and this week was no different – but the data doesn’t support that theory. TAKEAWAY: The transparency of on-chain data allows us to track outflows from known bitcoin miner addresses to known exchange addresses. This shows that miner outflows to exchanges have been trending down. True, this doesn’t catch off-exchange activity, and the overall balance at mining addresses is down to early 2020 levels, according to the data. But accounts from mining pools support the conclusion that miners are more likely to be selling fewer BTC into the rally, rather than dumping and causing the price to fall.




Bitcoin EFT may come to US, but not all crypto investors think it’s needed

As Bitcoin ETFs launch in Canada, an approval from U.S. authorities appears to be closer than ever before as naysayers start to run out of reasons to deny it.




The United States Securities and Exchange Commission’s floor is littered with failed crypto fund filings, but this year, following Canada’s lead, the U.S. might actually have an exchange-traded fund that tracks digital assets. 

After all, the price of Bitcoin (BTC) is booming, the SEC has a new crypto-savvy chairman, and Canada, which is sometimes viewed as a beta test site by U.S. regulators, debuted a Bitcoin ETF in late February that by most accounts has been stunningly popular. But does a crypto ETF really matter anymore?

Clearly, a lot has changed in the past year — what with a global pandemic, a change in administrations in Washington and new price records being set regularly on the crypto front. Whereas many predicted as recently as June 2020 that an SEC-sanctioned Bitcoin ETF would be a very “BIG Deal” and “open the flood gates” to BTC adoption, with a crypto ETF now on the brink, some observers aren’t so sure anymore.

“I used to think it would be a game-changer but now I think it would be just another step in the evolution of crypto,” Lee Reiners, executive director of the Global Financial Markets Center at Duke University School of Law, told Cointelegraph.

Eric Ervin, CEO of Blockforce Capital and Reality Shares and co-founder of Onramp Invest, told Cointelegraph: “I think a crypto ETF is less significant than we thought before because a lot of institutional investors finally got tired of waiting and figured it out.” Ervin’s firm was one of nearly a dozen whose application was sideswiped by the SEC — the Reality Shares ETF Trust application was pulled in February 2019 “on SEC advice.” That said, Ervin acknowledged that there “are still a massive number of investors on the sidelines” who might welcome such an investment option.

Meanwhile, applications to the U.S. agency keep flowing. Most recently, the Chicago Board Options Exchange requested permission to list a Bitcoin ETF proposed by asset manager VanEck.

State Street Corporation — one of the world’s largest custodians, with $38.8 trillion in assets under custody and/or administration — will be servicing the VanEck ETF, if approved. Nadine Chakar, head of State Street Global Markets, told Cointelegraph that the company is working to bring ETFs and exchange-traded notes to market in Europe and the Asia-Pacific region, adding that “Our clients have seen interest grow in Bitcoin and […] there is a feeling the market is maturing.” Indeed, in the three years since early 2018 when Bitcoin interest last peaked:

“They feel that the market has become more efficient, crypto custody solutions have evolved to offer better security that they are comfortable with, and regulatory clarity has increased such as we’ve seen with the OCC’s [Office of the Comptroller of the Currency] recent announcements.”

More success in 2021?

Has the crypto ETF climate really changed in Washington though? Michael​ Venuto, co‑founder and chief investment officer of Toroso Investments, told Cointelegraph: “I believe the odds of a U.S. Bitcoin ETF being approved are higher than in previous years.” Improved crypto custody, reporting and transaction transparency have calmed many regulators’ concerns, he said, and “The fact that BNY Mellon announced its move towards crypto custody on the same day as a Bitcoin ETF was approved in Canada is not a coincidence.”

“Investors have been looking to the US as the next potential market for ETFs that track digital assets,” wrote FTSE Russell, a subsidiary of London Stock Exchange Group that produces stock market indices, in a recent blog post, adding: “And speculation has only increased in recent weeks with the first Bitcoin ETF launch in Canada joining crypto ETP listings in Germany and Switzerland, as well as the continued popularity of the Grayscale investment trusts tracking this market.”

Regarding Gary Gensler’s nomination as SEC chairman, “This goes a long way towards advancing innovation in the US financial markets,” added Ervin, who agreed that the likelihood that U.S. regulators will approve a Bitcoin ETF this year has improved. He added further:

“As a former Chair of the CFTC, Gensler understands the importance of financial innovation, but he also has a healthy respect for the potential damage that unchecked markets bring.”

Reiners observed that based on what the SEC had been saying recently ETFwise — which isn’t much — a U.S. crypto ETF seems to be no closer than a year ago. However, when taking a broader look at the maturation of the crypto market and the subsequent institutional interest, he believes “It’s getting harder for the SEC to continue to say no.”

Is an ETF better than a trust?

But would an SEC-sanctioned ETF really be of major consequence now? What, for instance, does an ETF offer Bitcoin investors that current “trusts” like Grayscale Bitcoin Trust don’t?

GBTC and other trusts trade over the counter, not on major exchanges like the New York Stock Exchange, noted Reiners. By comparison, “An ETF is widely accessible to all,” including retail investors without access to OTC markets.

State Street’s Chakar noted that GBTC is essentially a closed-end fund open to qualified investors, and although shares of the trust are available on the secondary market to retail investors, those shares “are not tied directly to the price of Bitcoin. As such shares most times trade at a premium — or a discount — to the underlying price of Bitcoin.”

Venuto added further: “The ETF structure provides for intra-day creation and redemption to meet demand. This function removes the premium and discount issues which have impacted the pricing of GBTC” — though he opined that if regulators were to approve a Bitcoin ETF, “Then in short order they would allow GBTC to convert to a similar ETF like structure.”

Along these lines, Canada-based investment manager Ninepoint Partners, which launched a Bitcoin trust two months ago, this week announced plans to convert its trust to an ETF on the Toronto Stock Exchange — following other Canadian investment firms seeking to capitalize on the untapped crypto ETF market in the country.

More adoption?

If a U.S. crypto ETF comes to pass, how would it play out? Would it bring in more institutional investors, for example? “Many institutions can only invest in funds, so the ETF is a wonderful step in the right direction,” Ervin said.

Institutional interest will continue to build regardless of an ETF, opined Venuto: “In terms of institutional adoption, that ship has sailed. […] An ETF will be primarily used by individual investors and financial advisors.”

“An ETF is more attractive to both institutions and retail investors in that it does tend to carry much less liquidity risk and more transparency to the underlying price of the asset — and fees associated with it,” said Chakar.

But what about Bitcoin and cryptocurrency adoption in general? Would a U.S. crypto ETF transform that landscape? Reiners told Cointelegraph:

“There are now lots of ways for retail investors to get exposure to crypto, and the list keeps growing. Plus now we have Tesla and other public companies investing in Bitcoin. The barrier between the crypto sector and the traditional financial system has been eroding for several years now; a Bitcoin ETF would further blur this boundary.”

Regarding Tesla, MicroStrategy and other public companies that have purchased Bitcoin recently, Chakar told Cointelegraph that “Investing in a company that has publicly acknowledged that it’s buying Bitcoin is probably not what most institutional [investors] would do to gain exposure to the asset.”

She added that crypto has been around for 10-plus years now, “But it has never been packaged in a way that allows for integration into a portfolio that is seamless.” By comparison, “ETFs have proven themselves to be a preferred and growing investment alternative thanks to the fact they offer a lower cost, liquidity and tax efficiency that direct investments may not, especially in nascent vehicles like Bitcoin.” Ervin told Cointelegraph that he likes the idea of an ETF for things like gold or silver, but for him, “Wrapping bitcoin up into a fund seems silly to me.” He added:

“There is no doubt that it is a better vehicle than a closed-end product, and competition will bring better fees and price discovery, but I don’t think most investors realize that they can buy Bitcoin directly without worrying about the cumbersome burden and costs of a fund.”

“Bitcoin doesn’t need an ETF”?

All in all, it looks like a U.S. crypto ETF will eventually come. As Reiners noted: “Regardless of their [the SEC’s] view on the merits of an ETF, if they are the lone holdouts, you have to wonder how much longer before they cave to the immense pressure and interest for an ETF.”

Under present circumstances, a U.S. government-approved Bitcoin exchange-traded fund may not be the game changer that some once predicted. A year ago, most didn’t anticipate the current institutional absorption of digital assets.

As Macrae Sykes, portfolio manager and research analyst at Gabelli Funds — an investment management firm — told Cointelegraph, institutional interest in cryptocurrency continues to grow. Coinbase’s initial public offering filing and Bank of New York Mellon’s recent announcement that it will support digital currencies offer further evidence of potential growing demand: “The ETF approval in Canada is just another step in the evolving regulatory process for accessing digital assets.”

“Bitcoin doesn’t need an ETF,” Venuto told Cointelegraph. Still, even if no longer a game changer, there is little for a crypto enthusiast not to like about an SEC-sanctioned crypto ETF: “Access is access and the more access to the asset class, the better,” said Ervin. After all, “Not everyone wants to own bitcoin directly.”

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Centra Tech Co-founder Bags 8-Year Jail Term For ICO Scam

The co-founder of the fraudulent crypto investment firm, Centra Tech, Sohrab Sharma has been sentenced to eight years in prison for his role in duping […]




The co-founder of the fraudulent crypto investment firm, Centra Tech, Sohrab Sharma has been sentenced to eight years in prison for his role in duping investors out of more than $25 million.

Ilan Graff, the Deputy United States Attorney for the Southern District of New York described Sharma as a fraud who co-founded a startup with the intention of deceiving investors with bogus business partnerships, bogus licenses and fake crypto-related financial products.

Sharma Dupes Investors Of Millions

Sharma and his cohorts, Robert Farkas and Raymond Trapani founded Centra Tech around July 2017 after which they conducted an Initial Coin Offering (ICO) where they distributed unlicensed securities in the form of CTR tokens. The ICO, which is similar to an IPO where a company raises capital for a new crypto offering, had them raise $25 million at its completion.

For the offering to indeed be successful, Centra Tech enlisted the services of celebrity Dj and musician, DJ Khaled as well as popular American boxer, Floyd Mayweather who both ran campaigns for it on their social media platforms.

Mayweather was said to have posted tweets of himself holding the startup’s debit card along with the caption, “Spending bitcoins Ethereum and other types of cryptocurrency in Beverly Hills…” After which he also made tweets urging fans to get their tokens ahead of the ICO’s launch. Dj Khaled in the same vein promoted the offering on his Instagram account.

Centra Tech also promoted the ICO by claiming the group had partnerships with Visa, Mastercard, and Bancorp, money transmitter licensing in 38 U.S. states. They also lied about having a Chief Executive Officer who had more than 20 years of experience in the banking sector and a master’s degree from Harvard University.

Following the uncovering of the crime committed by Sharma and his team, the U.S. Marshals Service seized 100,000 Ether from the company which it sold for roughly $33.4 million earlier this year.

ICO Ambassadors Settles With the SEC

Prior to Sharma’s sentence, Robert Farkas, co-founder and managing operator of Centra Tech was sentenced to one year in prison for his role in the scheme. Raymond Trapani also pleaded guilty.

DJ Khaled and Floyd Mayweather agreed to six-figure settlements without admitting to wrongdoing after Centra’s investors filed a lawsuit against the pair. This was after the investors failed to prove they bought tokens as a direct result of the pair’s actions.

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Cover Protocol Slides 40% Following Breakup with Yearn Finance (YFI)

Yearn Finance has announced that it’s parting ways with Cover Protocol. This resulted in a serious crash in the price of COVER.




Yearn Finance (YFI) and Cover Protocol (COVER) announced today that the merger process between both, initiated last November, will come to an end. The breakup between both has resulted in a big hit for the price of COVER.

Yearn Finance Breaks up With Cover Protocol

In November 2020, Yearn Finance’s founder and arguably one of the most influential figures in the field of decentralized finance (DeFi) announced that they will join forces with the market coverage provider Cover Protocol.

Today, however, the team announced its decision to end the merger process.

We have decided to end the previously announced merger process of Yearn and Cover. Both protocols will continue to operate independently. yVault depositors who have previously purchased Cover protection are unaffected by this.

In a now-deleted tweet, Cronje remarked that “this was very sad to see. I had very high regard, trust, and faith in the Cover team. Lesson learned. Won’t trust them again.”

Shortly after that, however, he removed it and said the following:


On the other side, the team behind Cover Protocol hasn’t provided any commentary on the matter at the time of this writing. They just said that they’ve “parted ways with Yearn” while clarifying that users can still buy Yearn coverage on Cover Protocol.

COVER Price Tanks as a Result

COVER’s price has been on an impressive run in 2021 as its price increased from around $380 at the start of the year to an all-time high of around $1,700 about two weeks ago. Since then, it’s been mainly down hill.

Nevertheless, the news of the ‘divorce’ definitely took a toll on COVER’s dollar value. The cryptocurrency is currently down about 40% at the time of this writing.

COVER/BUSD. Source: TradingView
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