SEC Delay of Bitcoin ETF Applications Causes Cryptocurrency Market to Slump
Summary:
Cryptocurrency market value drops as SEC delays Bitcoin ETF applications, resulting in a 3.7% decline. Bitcoin experiences a 4.5% loss, and the market awaits institutional investors. Long liquidations and a stronger US dollar contribute to the slump. Technical analysis shows potential for a rebound, but a break below support may cause further decline. This article does not provide investment advice.
Cryptocurrency market capitalization sees a decline as the U.S. Securities and Exchange Commission (SEC) impacts the rally this week by delaying spot Bitcoin ETF applications. The overall value of all cryptocurrencies shrinks by 3.7% within the past 24 hours, reaching $1.02 trillion as of September 1st. Bitcoin (BTC), comprising nearly half of the crypto market, experiences a loss of 4.5% during this period. The selloff begins after the SEC postpones its decision on six spot Bitcoin ETF applications, including BlackRock's, until October. Bitwise, one of the Bitcoin ETF applicants, withdraws its application following the SEC delay, amplifying the losses. The crypto market has eagerly anticipated SEC approval of a Bitcoin ETF in the U.S. as it is expected to attract institutional investors and bring more capital into the sector. However, gains achieved from the recent federal court ruling favoring Grayscale Investments' application to launch a Bitcoin ETF have now been erased. Bitcoin's losses over the past 24 hours align with significant long liquidations in the crypto derivatives market. $106.32 million worth of long positions have been closed, while short liquidations amount to only around $16 million in the same time frame. The selling pressure increases as exchanges sell Bitcoin to cover borrowed amounts from traders, thereby protecting themselves from losses. The downturn in the crypto market can also be attributed to the strengthening U.S. dollar, which has consistently shown a negative correlation with cryptocurrencies in 2023. Since August 31st, the U.S. dollar index (DXY) has risen by 0.75%, further impacting the crypto market that exhibits a daily correlation coefficient of approximately -0.78 with the DXY. The DXY has been on an upward trend since July, coinciding with Bitcoin's yearly highs around $31,000. Looking ahead, the crypto market hovers near its long-standing ascending trendline support, with the potential for a rebound towards $1.058 trillion in September. However, a significant breach below the ascending trendline support could signal a crash in the crypto market valuation towards the $950-975 billion range. As a reminder, this article merely provides information and does not offer investment advice or recommendations. Readers are advised to conduct their own research before making any investment or trading decisions.
Published At
9/1/2023 1:40:17 PM
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