It’s no secret that the crypto world is thirsty for a Bitcoin ETF, and previous rejections from the US Securities Exchange Commission (SEC) has sent the price of Bitcoin plummeting. That being said, a spate of recent development has once again given hope to the future of the Bitcoin ETF, but after extreme market volatility in recent weeks the SEC could shut down all ETF proposals. It’s without a doubt that there was a large amount of market manipulation that led Bitcoin to spike from $4,000 to just shy of $14,000 in a couple of months, and it’s this potential manipulation that the SEC has an issue with.
Volatility is the Main Issue
The SEC has rejected scores of ETF applications, including several from the Winklevoss twins. The main reason cited for the rejections was either too much volatility or lack of controls on potential market manipulation – something we’ve seen a lot of lately. Back in April, we saw Bitcoin pump more than $1,000 in a few hours – kicking off the fresh bull market. While many traders thought that the movement was down to FOMO, it was in fact a number of large orders placed from the same trader – the definition of manipulation. Then, as Bitcoin was approaching $14,000 one $200 million sell order on Coinbase caused Bitcoin to crash down to the mid $9,000 mark – yet another red flag for the SEC.
Could VanEck Finally Make it?
After a prolonged government shutdown, the CBOE, VanEck and SolidX pulled their Bitcoin ETF application. The SEC were on shutdown and there wasn’t enough time for the application to be reviewed and approved, so the team pulled the application. The group then reapplied a handful of days later – resetting the number of days the SEC had to approve or decline the application. If it wasn’t for the latest wave of volatility, we could see the application make it through.
A Bitcoin ETF would undermine a lot of the principles that Bitcoin was first created for – being a currency rather than a financial product. That being said, a large portion of the crypto community still believe that the ETF is the key to the next bull run. If we can see some relatively positive news come from the SEC, we could see Bitcoin markets rise significantly as people prepare for a new wave of institutional investors diving into the Bitcoin markets.