Bloomberg: Bitcoin ETF is unlikely to pass, and the price will fall below $800

Bits ("bits" or "bits", which are the basis of computer operations and belong to the category of binary) are the information units of all digital currencies, which are composed of two values: 0 or 1. Perhaps it is time for investors to see clearly that buying Bitcoin is equivalent to a binary-related gamble.

Despite the People’s Bank of China’s (PBOC) earlier attempts to control Bitcoin trading, however, the virtual asset has defied the odds and is now trading at a record high. The main factor behind the price increase is the Bitcoin ETF launched by the Winklevoss brothers, which traders have high hopes for and believe will be successfully approved.

March 11th is the day that will decide the fate of the Winklevoss brothers’ Bitcoin ETF, when the U.S. Securities and Exchange Commission (SEC) will give a final decision on whether the ETF can be successfully launched. Once the Bitcoin ETF is successfully launched, it will make history and pave the way for other providers.

There are two Bitcoin ETFs currently under review, proposed by Solidx and BIT (Bitcoin Investment Trust). BIT’s over-the-counter (OTC) trading has been going on for some time.

The reason why the price of the currency broke the record of $1,137 in 2013 is that investors believe that the arrival of a Bitcoin ETF will increase demand for this limited-supply asset class and drive up the price of the currency.

However, they overlooked the fact that the Winklevoss brothers might fail. The Bitcoin ETF contract on the cryptocurrency derivatives trading platform BitMEX shows that the approval rate of the Winklevoss ETF is only 34% .

From July 2013 to now, the Winklevoss brothers have had to wait for the SEC to decide whether this digital currency can be classified as an asset class. They hired Kathleen Moriarty, a legendary lawyer in the ETF field. However, the lawyers working for the Winklevoss brothers did not want to participate in this application because they believed that Bitcoin might be a Ponzi scheme.

In addition, the Winklevoss brothers also tried to convince the SEC by constantly revising their applications. The recent rise in the price of the currency came after they submitted new documents to the SEC. They plan to increase the size of the Bitcoin ETF issuance to $100 million.

In addition, they added a settlement system that determines the price of Bitcoin and defines the net asset value on a daily basis, and bought insurance to protect against losses caused by attacks.

However, no matter how they try to please the SEC behind the scenes, they cannot win the appreciation of this regulatory department. The SEC's operating model still refers to the legislative basis of 1933. The US government cannot easily stamp and approve the Bitcoin ETF because they understand what an ETF means.

It is very likely that the SEC will refuse to list a Bitcoin ETF, and by then, the price of the currency will fall 800美元以下, a third of its current price, just like the impact of the surprise inspection by the People's Bank of China in January. In addition, the negative impact of the Bitcoin ETF after its approval is unknown.

The launch of the first gold ETF was not greeted by a bull run. The price actually fell during the first year. Eventually, the price of gold rose again, but I’m afraid this was less a result of the ETF than a signal of the turmoil brought on by the global financial crisis.

In short, the potential negatives of a Bitcoin ETF far outweigh the positives, at least in the short term. The future of the digital currency is never as simple as a binary digit. Unlike a programming code, one of the values ​​(representing the future of Bitcoin) is not 0, but a complex number.