SEC delays bitcoin ETF, market drops

Author: Loopy Lu

On August 30, Grayscale won a lawsuit with the SEC. The market soared in response, and Bitcoin once broke through 28,000 US dollars. With Grayscale's judicial victory, people have placed high hopes on the imminent approval of a spot Bitcoin ETF in the United States. This "ambition" of the crypto world seems to be within reach. However, within 48 hours of the good news that Grayscale won the lawsuit, another sudden change occurred.

The U.S. Securities and Exchange Commission stated today that they need to postpone the approval time of Bitcoin spot ETFs, and at least three spot ETFs proposed by WisdomTree, Valkyrie, and Invesco have been postponed. Delay product decisions until at least mid-October.

Tomorrow after tomorrow, so many tomorrows

This is not the first time the SEC has delayed a Bitcoin ETF recently.

In mid-June, BlackRock filed an application for a bitcoin spot ETF, sparking a decidedly bullish sentiment on the cryptocurrency market. In late July, the SEC began reviewing whether to approve or reject six bitcoin spot ETF listing applications, including BlackRock. (Note from Odaily Planet Daily: Specifically including BlackRock iShares Bitcoin Trust, Fidelity Wise Origin Bitcoin Trust, WisdomTree Bitcoin Trust, VanEck Bitcoin Strategy ETF and Invesco Galaxy Bitcoin ETF.)

Typically, the SEC officially initiates a review when it is published in the Federal Register. The review period defaults to only 45 days. However, the review period can be extended.

Therefore, delaying the review results has become a trick that the SEC has tried repeatedly.

This year’s “ETF wave” can be traced back to “Mr. Mu’s” ARK. Back on May 15, the ARK 21 Shares Bitcoin ETF was published in the Federal Register. BlackRock, which manages more than $9 trillion, applied for a Bitcoin ETF in June, which also triggered a wave of excitement in the industry. The SEC published the fund proposal in the Federal Register on July 19, starting the 45-day countdown to the Commission's ruling on the product.

However, until now the SEC has not made a decision on these ETFs.

On August 11, the SEC once again extended the review period for the Bitcoin ETF applications of Ark Investment Management and 21 Shares. According to the SEC's review rules, review can be postponed for up to 240 days.

Of course, the ETF application that was postponed again today is similar. The SEC filing states that the ETF application for WisdomTree has been postponed to October 17.

The SEC seems to be just trying its best to delay a final decision without giving a specific reason for the delay. "The Commission considered it appropriate to designate a longer deadline for taking action on the proposed rule change so that it would have sufficient time to consider the proposed rule change and the issues raised therein."

The market is falling and the market direction is confusing

As the SEC continues to postpone, the market has once again made pessimistic forecasts for the broader market.

Coinglass data shows that in the past 24 hours, Bitcoin liquidation liquidated at US$48.89 million and ETH liquidated at US$28.76 million.

Within the maximum review period of 240 days, there are some critical points at which a decision has to be made: 45 days, 45 days, 90 days, 60 days. **If the SEC postpones 3 times, it will have to make a final decision-approval or rejection, after 240 days, the SEC will not be able to postpone the decision according to the process. **

The change in market expectations also allowed the K-line trend to draw a perfectly shaped "gate", and the price of Bitcoin once fell below $26,000. People can't help but wonder, when will the ETF matter be settled?

Some analysts had predicted the postponement long before it happened. Bloomberg analyst James Seyffart said on August 15 that he believed the early September review deadline might not see the end of the review. He believes the review will inevitably be delayed and is more concerned about the final deadline of January 10th.

Grayscale won the lawsuit, and the giant whale made a profit

Judging from market trends, Grayscale’s victory is a high point in this round of ETF narratives that have strongly stimulated the market.

But as the facts gradually became clear, people began to doubt whether Grayscale's victory was really a victory for BTC? Although Grayscale has won a judicial victory against the SEC, it does not mean that Grayscale GBTC is allowed to convert into a spot ETF.

Bloomberg TV analyst Sonali Basak said: “This does not mean that GBTC will automatically and immediately convert into an ETF. As the court said, it only means that the US SEC failed to explain why it approved the Bitcoin futures ETP and not Grayscale The proposed product (spot ETF)." She added that there is still a long process to go, including a 45-day appeal period, when both parties will review the ruling, and the SEC can also request a plenary hearing. “It is unclear whether Grayscale will need to resubmit its application to convert GBTC into an ETF.”

To put it simply, the court only believed that the SEC's process of rejecting Grayscale was illegal, that's all. After going through the review process again, the SEC can still use other reasons to reject Grayscale’s application again. However, such a vague news has brought strong stimulation to the market.

And when we put our perspective back to before Grayscale won the lawsuit, it is not difficult to find that in the few days before winning the lawsuit, the giant whales were constantly deploying and making a lot of profits.

Santiment monitoring data shows that wallets holding 10-10,000 BTC increased their holdings of nearly $400 million in BTC the day before Grayscale’s victory was announced. Although there is a lack of evidence, people still suspect that whale addresses may have prior knowledge of the outcome of Grayscale's lawsuit with the SEC based on trading operations.

Grayscale's victory seems to have created an opportunity for the giant whale to leave. Before Grayscale won the case, nearly 30,000 BTC were transferred to CEX, worth $822 million at market prices.

On August 29, Markus Thielen, director of research at Matrixport, an encrypted financial company owned by Wu Jihan, said, "We will be long on Bitcoin and strictly stop losses. We expect US Treasury yields to fall and US technology stocks to rise."

“buy the rumor, sell the news”

It is always dangerous to trade following the news. It is difficult for people to react immediately to the news as soon as it is revealed.

In just 48 hours, the market experienced another ups and downs and returned to its starting point. A group of giant whales may have made profits, while another group of retail investors have experienced large liquidations.

Eric Balchunas, senior ETF analyst at Bloomberg, doesn't think he would be surprised if the SEC delays ETF applications. In his view, the timetable for the review period was not important. “It is still possible that the SEC will give in at some point and we will eventually see these applications approved.” He predicted that the probability of a Bitcoin spot ETF being launched this year is 75%, and the probability of launching it as late as the end of 2024 is as high as 95%.

As the impact of ETFs comes to an end, the market is once again heading toward pessimism. Although many people believe that the approval of a spot Bitcoin ETF may bring a huge boost to the market, this event is still too far away from us.

As we enter September, our market is once again going negative. Historically, September has been Bitcoin’s worst month. From 2013 to the present, there have only been two occasions (2015 and 2016) when Bitcoin made a profit within the month in September, and the rest of the years were losses.

Perhaps, we still need to be more patient with the market trend in the long term. There are no potential major positive events expected in September, and in October, the potential approval of the Ethereum futures ETF may be the next major event that drives the market. **