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Friday, July 19, 2024

BTC Experiencing a Downtrend: Examining the Catalysts Behind Bitcoin’s Current Drop

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  • Earlier, Bitcoin dropped below the $30,000 mark after briefly dominating above $31,000.
  • Blackrock and Fidelity were not sufficiently clear and comprehensive.

Bitcoin (BTC), the largest cryptocurrency by market capitalization, has experienced a significant drop, sending shockwaves through the crypto market. A report revealing the U.S. Securities and Exchange Commission’s comment on asset managers’ application for the launch of spot Bitcoin exchange-traded funds was the cause of this decline.

On June 30, according to the SEC, the filings made for the Bitcoin exchange-traded funds (ETF) by Blackrock and Fidelity were not sufficiently clear and comprehensive. The SEC’s reaction to the BTC ETF filings has directly impacted the BTC trading price. After the comment, the trading price of BTC experienced a drop of nearly 1%.

Traditional Finance’s Interest in Digital Asset Sector

On June 16, Blackrock, the global asset management company, filed an application for a Bitcoin spot ETF. The road to a place in the Bitcoin ETF has been difficult. Despite four Bitcoin futures ETFs receiving approval from the SEC, no spot market ETF has yet to launch at that time.

The whole crypto market has waited for Blackrock’s application approval, which may be the turning point for the Bitcoin ETFs. However, after a few days, the SEC approved the first leveraged Bitcoin futures exchange-traded fund (ETF). The 2x Bitcoin Strategy ETF (BITX) from Volatility Shares becomes the first leveraged crypto ETF to get approved in the United States.

The approval of Volatility Shares’ 2x Bitcoin Strategy ETF (BITX) has boosted the confidence of BlackRock. Moreover, it also increased traditional finance’s interest in getting into the digital asset sector. The approval results in a surge in the BTC trading price. Following that, Fidelity, the asset manager, officially filed for its Spot Bitcoin ETF recently.

This is Fidelity’s second attempt to file for a similar project. The asset management company failed to get the SEC to approve a Bitcoin ETF in 2022. Moreover, the analyst states that BlackRock could maintain a possibility of approval as high as 50%. The case might afterward imply that Fidelity has an equal chance.

SEC Deems Recent Proposals Inadequate

However, in the end, the SEC stated that the recent proposals by asset managers to introduce spot bitcoin exchange-traded funds (ETFs) were deemed inadequate. The SEC’s response to the applications has shocked the whole crypto market.

Moreover, the SEC added that it returned the filing because it didn’t mention the name of the spot Bitcoin exchange. According to the report, the Nasdaq and Cboe would have a surveillance-sharing agreement or offer enough information on the arrangement. And also, the filings can be resubmitted. The exchange plans to update and resubmit its filing.

The SEC Decision’s Impact on Bitcoin

The SEC’s decision started to have an impact on Bitcoin’s trading price. The trading price of BTC was last trading at $30,379, just below the flat line. Earlier, it dropped below the $30,000 mark after briefly dominating above $31,000.

Bitcoin’s percentage supply on exchanges has experienced a decline of 11.07%. It is the lowest level in the last five years. There was a decrease in the percentage of BTC that were available on exchanges because 910,000 BTC were sent to wallet addresses rather than exchanges.

At the time of writing, the trading price of Bitcoin is around $30,323, with a decline of over 0.81% in the last 24 hours. The trading volume of BTC has experienced a massive increase of 96.52%, according to CoinMarketCap.

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