Bitcoin is off the wagon, again.
The cryptocurrency has plunged more than 7 percent in the last week, now trading just above $7,500. Despite the latest drop, one crypto trader says the sell-off is only temporary.
"[Bitcoin has] had a pretty good run from $5,800 up to $8,300, $8,400 or so," said CNBC "Fast Money" trader Brian Kelly of Brian Kelly Capital. "So while it might seem crazy to the legacy markets and the bitcoin world, this is just a normal correction."
The growing prospect of what would be the first bitcoin exchange traded fund has sent a flurry of investors back into the cryptocurrency market of late, pushing bitcoin above $8,000 for the first time since May. The wind was taken out of the sails on Friday, as investors digested the SEC's rejection of the Winklevoss twins bitcoin ETF application.
"I think this is a good environment," Kelly said. "I think the holdup is structural within the ecosystem. It's just not quite ready for prime time yet."
The SEC has been vocal about its concerns of fraud and price manipulation when it comes to the cryptocurrency market. While Kelly is still positive on the future of a bitcoin ETF, he believes "there's still two big hurdles we need to cross" before it can become a reality.
The first of which would be the creation of a regulated cryptocurrency exchange like one proposed by the New York Stock Exchange parent company last May. The move would add to a growing list of institutional players seeking to take advantage of the cryptocurrency frenzy.
"We've seen multiple companies like Fidelity, like BlackRock looking into it," Kelly said Tuesday on CNBC's "Futures Now" "There's definitely more of a buzz of more money coming into this sector." Along with the addition of a regulated exchange, Kelly said a potential bitcoin ETF would also require institutional quality custody to reassure its legitimacy on a broader scale.
Although Kelly doesn't forecast an approved crypto ETF in the United States until at least the fourth quarter of this year or about "the next four months or so," he remains optimistic that it'll get passed.
"We're in an environment where there's less regulation and this is the best opportunity to get something new through," he said.
Bitcoin is down nearly 41 percent year to date, and currently trading around $7,600.
Cryptocurrency-focused merchant bank Galaxy Digital started trading on a Canadian stock exchange on Wednesday.