Bitcoin prices dropped sharply Tuesday evening and into Wednesday morning in the wake of the SEC postponing its decision on a proposed Bitcoin ETF. Had it been approved, the ETF would have been the first financial product of its kind.
Yesterday started out well enough – really, it did. After dropping below $7000 – again – on Monday, Bitcoin managed to inch its way back up over that threshold overnight and was even flirting with $7200. Then, at 5:17 pm EST, Bitcoin prices fell more than 4 percent in just 20 minutes. Two more price drops of more than 2% each occurred 2 hours later and 5 hours later, respectively.
So what happened yesterday to prompt this kind of market reaction? As it so happens, the SEC filed a document announcing that they were delaying their decision regarding the VanEck Bitcoin ETF until September 30, 2018.
This marks VanEck’s third attempt to get a Bitcoin ETF approved – the first two were rejected by the SEC outright – and the community is on tenterhooks, waiting to see what the ultimate decision will be. This delay comes on the heels of the SEC rejecting the Winklevoss twins’ ETF late last month.
Why Do We Care About a Bitcoin ETF Anyway?
If you believe that more mainstream investor interest is a critical factor in broader cryptocurrency adoption, then you understand why a Bitcoin ETF is so important. According to The Motley Fool, there are three reasons why it is important for a Bitcoin ETF to be approved and listed:
- It would provide a cost-effective means of investing in Bitcoin without having to buy bitcoins directly.
- It is a safer alternative. ETF investors wouldn’t have to worry about forgetting their wallet password or an exchange getting hacked.
- It would create new investor interest – both individual and institutional.
There are other reasons, of course, such as the fact that listing a Bitcoin ETF would add additional credibility to Bitcoin. The most immediate effects would be felt in the Bitcoin market, of course, but they would also be felt throughout the cryptocurrency market – like a ripple effect.
So Now What?
We do what we have always done. We weather the storm. We need to remember that despite this temporary setback – and it is temporary – there are a lot of positive things going on in the cryptocurrency space right now. Microsoft and NYSE parent company Intercontinental Exchange are teaming up to launch their own cryptocurrency platform, Goldman Sachs is seriously considering offering custody services to crypto funds, and we’re finally finding out that even US members of Congress are Bitcoin investors.
These are just a few examples of why we need to remain optimistic about Bitcoin – and cryptocurrencies in general.
Bitcoin isn’t going anywhere. You know, I know it, the government knows it. And remember – the SEC didn’t say ‘No’. It only said ‘Give us more time.”
What do you think about the market response to the Bitcoin ETF delay? Are people placing too much importance on it? Let us know in the comments below.
Images courtesy of CoinMarketCap, Shutterstock