THE SEC DELAYED ITS ETF DECISION – AND MARKETS DIDN’T LIKE IT ONE BIT
The U.S. Securities and Exchange Commission (SEC) decided yesterday that they would delay their decision regarding the bitcoin ETF that was proposed by money management firm VanEck and crypto startup SolidX. They’ve pushed their final determination back by more than a month. We’re now expecting a ruling sometime mid-September.
Suffice it to say- markets reacted negatively. Anticipation of this announcement has generated massive amounts of hype (especially in Japan and Korea) and the delay has triggered a degree of frustration.
IS IT TIME TO PANIC?
No, no and no. There’s no need to panic. In the past, SEC officials have used the agency’s powers to push back decisions on bitcoin ETFs. Simply put: this is a historic decision and they’re taking their time.
Certainly there are those who are reacting negatively to this delay, causing prices to dip. But here’s the silver lining: these emotion-driven, knee-jerk reactions can be beneficial to the patient, rational investor.
The SEC decision is still outstanding. While there might be reasons to expect a denial, there are just as many reasons to anticipate an approval.
Which brings us to our next point–
THIS IS A USABLE MOMENT – LOOK TO THE MONTHS AHEAD
Historically, bitcoin has seen big price moves in the fall. It’s happened time and again.
Crypto-prices may have lowered this month, but this has happened in the past. In fact over the last eight years we’ve seen a median decline of roughly 18% in August from the month’s price high. But the market tends to bounce back by year’s end.
Some of bitcoin’s largest price gains of all time have taken place in the fall. For example: between August and December bitcoin gained 400%in 2010, 1120% in 2013, 121% in 2015 and 590% in 2017. (The fourth quarter seems to be a bullish time for crypto-markets.)
“Historically, 10 days comprise all the performance in any single year of Bitcoin’s price. If you just took out those 10 days, Bitcoin’s down 25 percent a year… The move from $8,000 to $25,000 will happen in a handful of days.”
THE MARKET MOVES FAST
What’s more interesting is that during its two biggest climbs in 2013 and 2017 bitcoin made some of its largest gains in a matter of days.
As Tom Lee puts it: “Historically, 10 days comprise all the performance in any single year of Bitcoin’s price. If you just took out those 10 days, Bitcoin’s down 25 percent a year… The move from $8,000 to $25,000 will happen in a handful of days.”
THE TAKEAWAY: BE READY
10 days is not a long time. Once the run has begun, it’s nearly impossible to make the right financial moves in time to take full advantage.
That’s why we stress the importance of having a plan in place and being prepared. If you believe the analysts who are predicting price climbs to $20,000 or $25,000 (and higher) by year’s end, it’s not unreasonable to assume that the jump will happen in a very brief span.
In fact, if past trends hold true, the run could play out so quickly that many will miss out before they even know it’s happening. Our philosophy? Those that are in the market now or have their funds ready to go will be the individuals who stand to benefit.
Let’s say for example that the SEC decision does come back positive. Combine this with the expected launch of the bitcoin market “Bakkt” in November and we could very well see one of those 10 day runs sooner rather than later.
It’s important to stay focused on how we win in the long term. If you believe in the potential of this asset class, it should be easy to see that it’s in moments like this that the savvy, patient investor can benefit from the hasty sell-offs of the emotion-driven investor.
Cryptocurrencies have generated a lot of wealth for a lot of people in a very short period of time. A market that moves as quickly as this one will create its share of skeptics. How do we know that bitcoin, something that’s essentially invisible and intangible, has value?
Eight years ago today, the first reported exchange of bitcoin for a consumer product – a pair of Papa John’s pizzas – took place. At a total cost of 10,000 bitcoins, it was a milestone for the adoption of cryptocurrency and one that has since been commemorated though the celebration of May 22 as “Bitcoin Pizza Day.”
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