Bitcoin has fallen 4.7% in the past 24 hours, falling below the $26,000 mark following news that the U.S. Securities and Exchange Commission (SEC) will delay the approval of several U.S. spot exchange-traded funds (ETFs) until October.
The SEC said it had suspended applications from Blackrock, WisdomTree, Fidelity, Bitwise, VanEck, Valkyrie and Invesco due to insufficient time for evaluation. The news caused market turmoil, causing Bitcoin to fall sharply for the second time in two weeks. Previously, Bitcoin's price had risen due to a sharp drop in U.S. Treasury yields and Grayscale's victory in the lawsuit against the SEC.
The decline has caused those who were enthusiastic about ETF investing to become conservative again. Rich Rosenblum, co-founder and president of GSR, told Blockworks that this week was a "ping-pong game of ETF approval probabilities."
“When an ETF is approved, it’s a big shift for the industry, so there’s a lot of anticipation for it,” he said. “But in the short term, it will also free up a lot of liquidity that would otherwise be locked up in GBTC.”
According to Coinglass data, the total long liquidation amount caused by Bitcoin's decline, although milder than the mid-August crash, when more than $855 million was liquidated in a single day, still reached more than $100 million.
These liquidations occurred primarily within a 12-hour period, with the majority concentrated on OKX, which accounted for $45 million, and Binance, which accounted for a total of $37 million.
Mark Connors, head of research at 3IQ, told Blockworks that the reversal in Bitcoin’s price was due to market sentiment remaining relatively negative, a hangover from 2022, coupled with a “stubborn” SEC.
“This is a ‘let me see’ market. For a U.S. spot bitcoin ETF to happen, it needs to be finalized,” he said. “I don’t think it’s a reaction to a change of view or a failure to meet expectations, as exemplified by granting full ETF approval,” he said.
The research director pointed to several upcoming positives, including Bitcoin’s ability to deliver outsized gains with relatively small potential losses, known as a “positive skew.”
Additionally, Bitcoin’s upcoming halving event (which will take place in less than eight months), its energy efficiency, and growing transaction fees all had a positive impact on market sentiment. As a result, Bitcoin’s price remained relatively stable this week.
The second piece of news: On August 29, the price of Bitcoin soared to $28,000, but Bitcoin lost these gains due to the U.S. Securities and Exchange Commission (SEC)’s decision to delay the approval of seven spot ETF applications.
Bitcoin fell below $26,000, down more than 4%. The SEC decided to postpone the decision on ETF applications from BlackRock, WisdomTree, Invesco, Fidelity, Valkyrie, VanEck and Bitwise.
Many were looking forward to the SEC’s decision on these ETF applications, hoping that the legal defeat would soften the regulator and approve the listing of these ETFs. However, the delay in the decision caused market turmoil and had a negative impact on the price of Bitcoin.
In addition, the decline in Bitcoin prices also led to the liquidation of a large number of long positions. Although the scale of this liquidation was smaller than the plunge in mid-August, it still reached more than $100 million. This shows that market participants closed their long positions as Bitcoin prices fell.
Market experts believe that the reversal in Bitcoin prices is due to the fact that market sentiment remains relatively negative, coupled with the SEC's decision to delay approval. However, some positive factors still exist, such as Bitcoin's halving event, energy efficiency, and growing transaction fees, which may have a positive impact on Bitcoin prices.
Overall, Bitcoin price volatility remains high and is affected by multiple factors, including regulatory decisions, market sentiment, and the performance of the overall cryptocurrency market. Investors should remain cautious and pay close attention to market dynamics and related news.