Unraveling the Complexities of Bitcoin ETF Approvals in Today’s Market

Peter Dunworth of The Bitcoin Adviser, recently shared his views about the much anticipated approval of Bitcoin exchange-traded funds (ETFs). In a candid discussion with Dale Warburton, Dunworth expressed skepticism about the widely expected approval of multiple ETFs by January 10th.

Dunworth began by questioning the prevailing sentiment that Bitcoin ETFs are guaranteed to be approved on the set deadline. He argued that regulatory bodies, such as the Securities and Exchange Commission (SEC), operate on their terms and may not adhere strictly to predetermined timelines. Dunworth stressed the independence of these institutions, suggesting that they “walk to the beat of their own drum.”

Highlighting a potential obstacle to approval, Dunworth delved into the breakdown of custodians for the ETFs. Notably, he pointed out that Coinbase represents 90% of the custodianship for the 20 ETFs under consideration. He raised concerns about Coinbase’s ongoing investigation by the SEC for unregistered securities, suggesting this could be a legitimate reason for regulatory hesitation.

Dunworth also predicted a scenario where the approval of all 20 ETFs simultaneously could create chaos in the Bitcoin market. He explained that such widespread approval would trigger a significant influx of capital—potentially $10 to $20 billion—entering the market in a short period. This influx, he argued, could strain the market and lead to extreme price volatility.

Additionally, Dunworth touched on the potential staggering of ETF approvals, as regulators might favor certain institutions over others. He dismissed the idea that approval would strictly adhere to the chronological order of applications and raised the possibility of regulatory favoritism.

In a surprising turn, Dunworth challenged the notion of a smooth approval process, citing uncertainties related to ongoing investigations, the SEC’s approach, and the potential impact of a sudden influx of capital on the market.He highlighted the unresolved issues surrounding major players like Coinbase and Grayscale, suggesting these factors could contribute to a delay in the expected ETF approval.