As I wrote for the New York Post on Sunday the brief recent history of bitcoin and its rise to $1,600 this year, despite having some setbacks early in 2017.

Many commenters cited bitcoin as a better “investment” than gold and silver because the cyrptocurrency cannot be manipulated like precious metals, through rehypothecation, or the selling the same bar of gold or silver many times through paper trades in the ETFs.

While this is true right now, I have written that this is the primary reason the Securities and Exchange Commission is reopening its decision not to allow bitcoin’s use as an ETF backed asset.

Many supporters of the cryptocurrencies are looking to the creation of an ETF as giving bitcoin the legitimacy it so craves. I believe if and when the SEC approves the use of bitcoin for an ETF it will be the death knell for the digital currencies price discovery freedoms.

While the feds may still have a sizeable stake in bitcoin through its prosecution of various organizations and the forfeiture of the digital currency after being found guilty for fraud or other capital crimes, the feds probably do not have enough to continue keeping the price of bitcoin in check.

This is why I believe the SEC has decided to take a second look at the BTC ETF to give the feds a mechanism to manipulate the price through papers trades.

Edited: I have added the below section on how the ETF would suppression pricing due to criticism by some.

When you have an ETF — or paper contracts that will far exceed the number of bitcoins in circulation — the ETF can short the BTC price or sell off the contracts without ever buying the underlining commodity, in this case BTC.

Both these actions will drive the price of BTC down as we have seen for the last 10 years in gold and silver prices.

As with all ETFs on commodities, the contract can be settled in US dollars. So there is no reason for the ETF to load up on BTC. It is a derivative product on the price only.