Aug 23, 2023

What Are the Risks of Investing in Cryptocurrency Before the Bitcoin ETF?

Crypto Market Today - Learn How to Invest in Web 3.0 and Avoid Crypto Crash.
BlackRock has more to lose from a BTC price crash pre-Bitcoin ETF

Whenever the price of Bitcoin takes a sudden and steep dive, numerous theories arise. Commonly, these theories involve government regulations, potential exchange manipulation, Bitcoin whales influencing prices, overleveraged traders, and even some conspiracies around Tether (USDT). On crypto twitter, many people discuss how to invest in web 3.0, the real-time crypto market, and when web 3.0 will be released. Some are even speculating about what three features are integrated into web 3.0 and the potential for a crypto crash.

SEC kicks Bitcoin ETF can down the road

Between Aug. 15 and Aug. 18, Bitcoin’s price experienced a significant 12% decline. This was likely due to a variety of factors, as suggested by analysts and experts on crypto twitter.

Unfortunately, verifying the exact cause of this crypto crash remains a difficult task due to the decentralized nature of cryptocurrencies and the lack of transparency among exchanges.

On Aug. 11, Ceni, a co-founder of Ceni Capital, made a prediction that turned out to be partially accurate. Ceni predicted a Bitcoin price lower than $29,000, anticipating the United States Securities and Exchange Commission (SEC) wouldpostpone its decision regarding the ARK Bitcoin exchange-traded fund (ETF).

However, it’s important to note that the prediction didn’t specify the timing of this event or the exact support level. As a result, the statistical foundation for this hypothesis becomes less certain.

Spot Bitcoin ETF is not a short-term deal for BlackRock

The concept of lower Bitcoin prices leading to increased profitability upon ETF launch may be intuitive, however, BlackRock’s commitment to market stability and investor confidence makes this an unlikely scenario. The priority of maintaining the market’s legitimacy could outweigh any immediate gains resulting from a low Bitcoin price.

The SEC plays a critical role in approving any financial product, especially within the crypto domain. Therefore, any activities that could be seen as price manipulation could jeopardize BlackRock’s chances of obtaining the necessary regulatory approval for its ETF.

Instilling investor confidence is key when introducing any investment product, especially a novel one like a Bitcoin ETF. A sharp crypto crash could erode trust among investors, not only in the asset class itself but also in the ETF. Therefore, BlackRock’s interest likely lies in launching the ETF during a period of positive sentiment, where investors feel confident about the potential for future gains.

If not BlackRock, who’s to blame for the BTC price drop?

The potential of government regulation of the cryptocurrency sector is often considered a possible explanation for the decline in Bitcoin’s price. This could be driven by a desire to bolster the U.S. dollar by reducing demand.

Joe Kerr, a market analyst, discussed this on Crypto Twitter:

Despite this interesting hypothesis, there are obstacles and factors that make it seem less likely. To begin with, it is possible to track government wallets to some degree, but analysts should keep in mind that governments usually own only a small portion of all Bitcoin, so their influence on the overall market is limited.

Betting against the BNB price and other nonsense

When it comes to betting against the price of BNB (BNB), traders must understand that it is not as straightforward as it may seem. Exchanges which follow regulations do not offer the option of borrowing BNB.

To get a better idea of the state of the exchange, one should check the transparency page of Binance and observe the real-time changes in the Bitcoin wallets compared to other exchanges. This data can provide insight into the performance of the exchange and identify any irregularities such as the misuse of customer funds or financial issues.

It is important to keep in mind that theories, such as BlackRock crashing Bitcoin before a spot Bitcoin ETF approval, are based on assumptions and oversimplifications of the complexity of the crypto markets, exchanges and regulations. Therefore, the actual results may differ significantly from what is expected.

To make informed decisions when investing in web 3.0, crypto traders should keep an eye on crypto Twitter, crypto markets today and the features integrated into web 3.0. This will help them stay up to date and avoid any potential crypto crashes.

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