Bitcoin price analysis: BTC/USD crashes to $6,556 as SEC postpones VanEck verdict

Bitcoin BTC Price ETF

Bitcoin loses most of its gains from July rally as SEC postpones ETF decision

In a major move, the US Securities and Exchange Commission (SEC) is set take a final call on the nine proposed bitcoin exchange-traded fund (ETF) in the next two months. The bitcoin ETF, which was first submitted for review by financial firm VanEck and cryptocurrency firm SolidX in June, would allow investors to buy into the cryptocurrency market without purchasing bitcoins on an exchange.

Bitcoin was down 5.6 per cent to $6,484 as of 8:19am in NY, recovering from a 7 per cent drop earlier while extending its 2018 decline to 55 per cent, according to Bloomberg composite pricing.

The SEC postponed its decision on whether to approve the Bitcoin ETF, dealing a blow to bulls who had bet a green light from the regulator would help sustain last month's tenuous rally. On this occasion, the SEC said that it is pushing out its decision until September 30. To do so would, though, require a rule change from CBOE Global Markets Inc for that to happen, and that's what the SEC has been mulling over.

Issues identified in [the SEC's previous] disapproval order have been resolved.

Canaccord researchers stressed that as a result of the background of VanEck and CBOE in dealing with regulated US markets, their Bitcoin ETFs are expected to be accepted by the SEC.

In July, Van Eck submitted a 13-page report to the Commission addressing various concerns the SEC has related to the ETF such as valuation, liquidity, custody, arbitrage, and potential manipulation.

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Luckily, the decision on the bitcoin ETF could come as early as August 10.

Generally, the U.S. Securities and Exchange Commission (SEC) has been hesitant in approving ETFs because of nascent assets and commodities.

In addition, there has been a "proliferation of information sharing agreements" that were not previously put in place in March a year ago. After reaching a high of $20,000 last December, the price of Bitcoin has fallen unceremoniously. The presentation also claims that existing bitcoin investments do not provide investors with sufficient protection, naming GBTC and XBT Provider as examples.

I still think it will be quite a long time until an ETF is approved. "A properly constructed physically-backed bitcoin ETF will be created to provide exposure to the price of bitcoin, and an insurance component will help protect shareholders against the operational risks of sourcing and holding bitcoin".

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