Bracing for Impact: Bitcoin Price Slides Below $8,000 ahead of SEC’s ETF Decision

Bitcoin (BTC) slipped back below $8,000 on Monday, as investors braced for a potentially landmark ruling on a keenly awaited BTC exchange-traded fund (ETF).

BTC/USD Update

After blasting toward $8,200 on Sunday, bitcoin’s price pulled back sharply on Monday. The price was last down 6.5% at $7,668, according to Bitstamp’s data feed.

Technically, bitcoin remains in a firm uptrend, as evidenced by the strong RSI and linear accumulation/distribution line.

Bitcoin price pulls back sharply from weekend highs. | Source: TradingView.

At current values, bitcoin has a total market value of around $136 billion. That represents 57% of the overall market.

The drop in BTC was accompanied by a broad pullback in the cryptocurrency market. Since peaking around $257 billion on Sunday, the cryptocurrency market cap has pulled back sharply to the $239 billion range.

Bitcoin ETF Decision Coming

On Tuesday, the U.S. Securities and Exchange Commission (SEC) will deliver a verdict on the VanEck SolidX Bitcoin Trust more than three months after the fund issuers resubmitted their application. As crypto analyst Josh Rager recently pointed out, the decision “could certainly have a series impact on the BTC price.”

Investors can expect the decision to go one of three ways. Whichever way the regulator decides, there will certainly be implications on bitcoin’s price.

If the SEC denies the application, bitcoin will likely experience a broad pullback from current levels. This means a dip further below $8,000. Denial is possible but less likely at this point given the SEC’s somewhat unique approach to the VanEck application.

Approving the ETF would send prices soaring and unleash a new wave of fear-of-mission-out (FOMO) buying. Approval at this stage is considered highly unlikely given the SEC’s concerns with price discovery and market manipulation.

A delay, which is the most expected ruling, will likely result in little change.

So, what makes the VanEck ETF application so unique?

Unlike other bitcoin ETF proposals, VanEck is proposing to list a physically-settled BTC fund that addresses the regulator’s lingering concerns around investor protection and market manipulation. The fund’s proponents say the bitcoin market has matured enough to support an ETF listing and have used the launch of similar products to prove their point. Read more here.

A bitcoin ETF, once approved, could make crypto markets more palatable to institutional investors. Institutional adoption is already well underway with the likes of Fidelity and Intercontinental Exchange entering the market, but a bitcoin-backed fund could hasten the flow of capital into the crypto ecosystem.

According to SEC Commissioner Robert J. Jackson Jr., approval will come eventually once the securities regulator believes its standards are met.

‚ÄúGetting the stamp of approval from the deepest and most liquid capital markets in the world is hard, and it should be,” Jackson said, based on an interview with Congressional Quarterly. “Once we make it available to everyday mom and pop investors, we are taking risks that Americans can get hurt.‚ÄĚ

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Charts via CoinMarketCap and TradingView.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi