Topic: [2017-02-21]The Bitcoin ETF Will Be Rejected According to Prediction Markets (Read 836 times)

This has been debate ever since the recent rise (and fall) and breaking of the ath has been happening in the last 164 hours of bitcoin price watching.
People are on the fence from saying it will rejected and the others say it has already been preapproved with the leak of that social media message from the SEC telling someone else (the Winklevoss twins?) of the price increase happening on the 14th from the announcement will be in their favor.
Isn't this considered insider trading isn't it? Giving out information that could tell them where to "hedge their bets" towards? This is what Martha Stewart got jailed for after all. Just because it is bitcoin involvement should make it's sentence if found to be any less different.

Your assumption is based totally on the phrase I highlighted. But that's not a must - in fact, between (late) 2013 and 2015 the demand for Bitcoins decreased. That could happen again after an ETF disapproval.

It's obvious - if you think that the ETF decision will not impact in the long-term growth of the Bitcoin price, then you can safely short the COIN_BH17 asset. But aside of the ETF, there are many other indicators that could make interest in Bitcoin decrease - e.g. a continued stalemate of the blocksize problem with often-occurring bottlenecks with transactions and high fees, or, even worse, a serious competitor among the altcoins.

So I think that most of the traders that invest in this asset are thinking short-term - and then my assumption about a distorted prediction market becomes very likely.

This completely  misses the point that btc is hard limited by design 21.000.000 and fiat currency is not.
Demand on bitcoin will increase so if you dump real bitcoins (you can only do this once) people will just see cheap coins , know the hard limitation and will buy anyway 
So in bitcoin you cant play that game.
Al these schemes are designed to work for fiat , because the number of fiat in circulation is unknown(unlimited).
even gold is unknown but bitcoin is known by the minute  https://blockchain.info/charts/total-bitcoins

I have now done a bit of math and now I think I know why the ETF asset from Bitmex is trading so high.

It's because it's denominated in BTC. So if you short it now (at 35/100), then you must pay 0.0065 BTC per unit - to today's prices. If the ETF doesn't get accepted, then you get - as far as I understand - 0.01 BTC in total (minus fees), but to the prices after the decision.

As many are predicting a crash after a rejection of the ETF by the SEC, then shorting it you can't really hedge against a +30% crash in case of disapproval. If your buy price is 0.0065 * €1000 (6,5 €) and the price after you "win" the bet is 0.01 * €700 (€ 7) then you make only 50 cents of profit.

Things are different if the crash goes only in the 850-950 area. But I think the calculation I exposed explains why the asset's price is significantly higher than the estimated approval probability of under 25%.

That's not what I said. I was more targeting this article to be written just for the purpose of lowering the fantastic sentiment in the runup to the ETF approval data. Good thing is that the fantastic sentiment doesn't allow itself to be dented by such articles as the price is still heading up.

For me it's interesting that the Bitmex COIN_BH17 price (actually 36/100) is significantly higher than the expections from experts ("under 25%", like here).

It is more interesting because there is a way to bet for and against the ETF: You could buy Bitcoins and hope that its price goes to >2000$ in case of an approval, like some experts think (the range is between ~$1100 and $3700). At the same time you could short the Bitmex COIN_BH17 asset, so if it settles at 0 because of a disapproval, you could cover the expected losses because of a possible crash of the Bitcoin price (most experts estimating between ~650 and ~900$) with the profits of this shorting operation.

As I think this hedging strategy could be one of the reasons of the actual price increase, I am wondering why the Bitmex asset price is not much lower. Well, what's true is that liquidity of the Bitmex prediction market is not very high and order books are too thin to allow a massive hedging of this kind.

We want the Fiat masters {SEC} to validate Bitcoin's credibility, but they allowed a situation where the US economy nearly collapsed due to poor

financial practices? The people hyping this up are looking for some quick profits and when they are done with that, they will exit the scene. We

want mass adoption and long term sustained growth and scaling.... and this will bring less volatility, which is one of their supposed fears?

That is right. The ETF will not be very significant.

all I can say to the ETF sceptics who are basing their opinion on a gambling(preditcion) site prognosis:
look at the 2016 US presidential elections results-the Politico gave Trump 15% to win just a day before the elections
and we all know how did it end
all in all its a win win scenario,if ETF is not approved bitcoin will not suffer any significant setback
but if ETF is approved,it could lead to a break through both in price and adoption

It doesn't say anything. Even if the market was predicting that it would be approved it wouldn't say anything. Only thing that matters is what will happen on March 11 next month. I guess it's more an attempt to make people less confident about the potential ETF approval, as the price is going up in advance just because of this event. Such artcles being pushed online before important events have a specific reason...

The much-anticipated bitcoin ETF, which has been going through the bureaucratic process for now more than three years, will likely be rejected according to a Bitmex prediction contract launched almost two weeks ago.

Since its listing, the market has always given Winklevoss’ ETF a less than 50% chance, usually standing at around 40% for much of the past week, falling to as low as 18% yesterday.
There were suggestions its sharp drop was due to a bug, but Greg Dwyer, Business Development Manager at BitMEX, told CCN:

“There have been no bugs with the ETF prediction market and it is operating exactly as intended. It is currently trading in a range between 24 – 37%. That is, the price represents the probability of the ETF being approved by the SEC come March 11.”

Spencer Bogart, Vice President of Equity Research for Needham & Co, gave the ETF only a 25% chance of approval.

The main reason appears to be due to bitcoin’s volatile nature, but stock markets have previously crashed, some company stocks have instantly become worthless and some have instantly jumped in price.

Furthermore, Kevin Lu, a hedge fund analyst, describes in a detailed article for Seeking Alpha how “Bitcoin is a unique, uncorrelated asset class… and that makes bitcoin extremely desirable from a portfolio construction perspective.”

The SEC’s thinking on the matter is not quite clear. We have reached out for comments, but have received no response in time for publishing.

SEC personnel has just changed or is in the process of changing. As such, the decision might be made in somewhat chaotic circumstances with the new personnel potentially not fully up to speed on the fairly complicated matter.

To illustrate, SEC’s page still lists the old chair, but President Trump has chosen a new nominee, Walter J. Clayton, described by the New York Times as “the Wall Street Lawyer” and as “the insider’s insider.” It further states:

“He had a front-row seat to the financial crisis, advising Barclays Capital in buying the assets of the bankrupt Lehman Brothers in 2008 and Bear Stearns in its fire sale to JPMorgan Chase in 2007. He has advised on mergers and initial public offerings, including the biggest ever, the $25 billion offering by Alibaba Group of China in 2013.”

Whether that experience makes him more favorable to bitcoin or more against it, remains to be seen, but the new administration does have some bitcoin supporters in its cabinet and emphasizes de-regulation with the aim of fostering economic growth. However, Clayton himself, a law graduate, has not previously made any comments on bitcoin.

He will soon be familiar with the digital currency, if he is not already, and will most probably be a very influential figure in this space. The ETF decision, whether approved or rejected, will have considerable implications. Equally, and perhaps more importantly, he might eventually want to give some sort of guidelines on the currently booming ICO markets.

Finally, the new administration might wish to allow margins and futures trading on regulated exchanges such as Coinbase and Gemini for its refusal by inaction so far has forced many to use somewhat shady and seemingly amateurish exchanges which has led to losses, opening the relevant agencies to criticism for failing to protect the public and worse, for indirectly causing the losses.

Whether they will take any such action is too early to say, but we might soon get a glimpse of the new administration’s approach towards digital currencies, the blockchain space and, more widely, the Fintech industry.
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