Sep 7, 2023

Asset managers ARK Invest and 21Shares have applied for regulatory approval for an exchange-traded fund (ETF) that would directly hold ether (ETH), according to a Wednesday filing to the U.S. Securities and Exchange Commission (SEC).

Video transcript

Joining us now to discuss the crypto markets is Capital Management, Chief Investment Strategist Victoria Bills. Welcome Victoria. Good morning Lawrence. I appreciated your comments earlier about um Arc or essentially uh despite what some, some people may have about essentially Arc in general, I think there is kind of some opportunity or some great news that this could bring some great news into spot e and to further liquidity into the market and spot e despite what our feelings may be about Arc and that fund in general. 00, are you are? Yeah, I mean are you just saying it's all hype? No, no, I just said that. Sorry that, that sorry, I didn't mean by the way, a if you're watching, please continue advertising if you haven't already not gonna say no to advertising dollars. Um But II I kind of want to talk about some of those issues of, of you, you, you mentioned liquidity because if you look at the, if you look at the spot markets, it's been some of the lowest uh volumes that we've seen in years and nearly half a decade. Uh some of that seems, I I would guess maybe I'm wrong, but uh most likely I am, but I would guess that a lot of it is we lost ftx in the marketplace which offered a lot of leverage in the futures marketplace, right, in perpetual futures. But it seems to have had this sort of impact in the spot markets. But is there more to that story than just the loss of a leveraged player, a major leveraged player in the market already? Now, almost uh you know, several months, you know, like a year we're going in here. Um I is there something going on in the marketplace institutionally retail wise that is getting people to say, you know what? I just don't wanna trade crypto because you know, we, we talk about a just now we talk about all this stuff, institutional interest in crypto seems to at least publicly be interested but volumes aren't there what's going on? Well, I think you touched on a couple of different levels that are causing essentially spot market prices to be at again, like having decade lows. Part of that is kind of consumer sentiment around um crypto and crypto around crypto in general, what we're seeing with the fall of Binance. There is a lot of general market speculation around if market makers can actually continue to also basically run their own ETF S and with also continued tension that's on Binance with the SEC um that also has caused a lot of even though they themselves are currently, they have like the highest trading volume, I believe at the moment, but they are still like showing like all time lows. And with the sec kind of cracking down on a lot of again, these derivative market makers spot market makers, it is causing a lot of tension speculation into the markets on the consumer side for the institutional investors. I think again, people who have been strong on Bitcoin, strong on Eth are continuing to kind of hold the line, no pun intended, but they are all. But they're also there is also again, when you talk about the general lay consumer, there is a lot of tension concerns because of again, what we're seeing with like general like stress in the markets and how people are viewing crypto in general after Binance and after FTX Victoria, maybe you have an answer for me. You know, when the spot Bitcoin ETF s were filed, we saw the price pump albeit Bitcoin has lost all of its gains. Now we then had the Ether futures ETF application. Now the Ether Spot ETF application. Why are the Ether markets not really reacting to to this? Why is it not really comparing to what we saw with Bitcoin? Well, I I think it's going to again like the pop that we're seeing is the general excitement about what is to come or what, how that is going to potentially play out in the future. But I think again, once what we can expect is with the spot ETF and with the um spot ee spot either ETF coming into the market potentially if the SEC approves it. Um again, this will allow for a lot more, this will allow for further liquidity for the individuals, for the individual investor. It also helps to provide a little bit more of a regulatory um framework for how essentially the SEC can continue to view. Um E again, previous S ECs have kind of labeled them as a commodity. It kind of seems like the SEC is leaning towards wanting to look at these as securities. Now, how that is going to play out in the long run or how the SEC is going to start looking at Ether Bitcoin and essentially as they're going through the process of trying to define these in the next coming years, I would say, or in the year in general is it's going to, I think that's where we will see like the market starting to kind of vol or vol volume coming back into the market once again, price, once things start to settle more, you know, uh have the Canadians and I'm not just bringing this up because uh Jen is in Ontario, but uh have the Canadians shown that there is no real interest in ETF S in crypto, ETF S uh or at least that the interest in crypto ETF S are probably not as significant to the market as uh maybe, maybe a lot of the talking heads on, particularly crypto media have been making it out to be um because of, you know, I, I, it, it, it, it just doesn't seem like people who had the opportunity to invest in those ETF S in Canada at least have really jumped on to it. Well, and I think again, when you're talking about how to utilize crypto, if you are a, just speaking from the perspective of a not like from someone who is a nonn crypto person, for example, or if you're talking about diversification in like an investment portfolio, crypto, um Bitcoin Ether in general, um they kind of essentially move in um move very opposite to to the traditional stock market. And so if I'm looking to, for example, hedge against us the US market or if I'm looking to hedge against stocks, then that's where you kind of or like if again, when you see volatility in the US stock market, that's where I think people start to pour more into those alternative assets, for example, spot pricing with E spot or um like bit or Bitcoin. So, but as again, markets are kind of like very, very steady in the United States. And again, also Canada has kind of, I'm I'm not quite certain about like the Canadian market, Canadian economic market overall, but like in the US, at least we're no worries, no worries. Um Sorry, Canadian, sorry. Um but I would say in general, like when you're, when you are looking at how to utilize crypto, a lot of the general consumers are looking at it as a hedge against us mu us markets or us stock markets. So markets are doing well. So therefore we might be honestly seeing volatility coming down because of that. Yeah. Uh and one last thing, uh you know, uh hate to ask this, but of course, what's your at least near term outlook here on, on Bitcoin particularly? Uh, and, and then you'll have to answer quickly because it seems like your cat wants to get out. Oh, no. Yeah. Your cat's been like wandering the back like, you know, what am I doing here? Although I didn't, he's, he's always, he's always the little troublemaker on this show. But, um, I would like my quick two cents on it. II I remain very positive on crypto overall. I remain very positive about what Cathy's doing with the creating a spot. E ETF it'll be one of the first in the United States. And honestly, I think that we will, if approved, we'll probably see a bump in volume and bump in kind of like trade, trade activity for that again, for like the general, for the general consumers. All right, Victoria, we're gonna have to leave it there. Thank you very much for joining us this morning and I hope you can tend to that kitty that that's been buying for your attention. Definite definitely will give him some hugs and scriptures after this. Thanks so much again. He's like hanging out in the back like, hey, I'm here, you know, I mean, he, he's a, he's a, he's a fan of crypto himself. So orange like, like this like, you know, little do kitty love that. We do Kitty. All right. That was be on Capital Management chief, investment strategist Victoria Bills.

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