Bitcoin ETFs Face Delays, Market Momentum Loses Speed

Market players may feel disheartened as 2023 progresses without a Bitcoin ETF approval.

The ETF talk is almost over but a decision has yet to come; according to the latest developments last Friday, the U.S. Securities and Exchange Commission (SEC) extended the proceedings on the spot Bitcoin exchange-traded fund (ETF) filing of Ark Invest and 21Shares.

Cathie Wood’s Ark Invest reportedly applied for the spot ETF in collaboration with 21Shares ahead of BlackRock. The newest delay in August came after a previous delay in June, but this outcome was correctly predicted by industry figures and analysts.

Bitcoin ETFs Face Delays

The SEC has the authority to delay ETF applications for up to 240 days, which means ArkInvest’s pending spot Bitcoin ETF decision is expected to reach the verdict in January 2024. In other words, Bitcoin ETFs are unlikely to launch by the end of 2023.

While it doesn’t indicate a rejection, the delay adds more uncertainties and frustration to the current market. Bitcoin has acted as a “stablecoin” over the past few weeks, hovering around $29,000 with little changes. This range is an increase from $25,000 in April, following BlackRock’s spot Bitcoin ETF filing.

With the flagship crypto in reluctance, altcoins’ price is mostly in decline. In the last 24 hours, Dogecoin (DOGE) dropped by 6%, Polygon (MATIC) fell by 7.3% while Solana (SOL), Polkadot (DOT), Bitcoin Cash (BCH), Shiba Inu (SHIB), and Avalanche (AVAX) lost 4%-5% their values.

However, some altcoins move the opposite way. Of top 100 tokens on CoinMarketCap, there are two altcoins with price increases – XDC Network (XDC) was up 2% and THORChain (RUNE) up 2.4%.

There is relatively neutral sentiment in the market due to the equal number of long and short traders, as reported by Coinglass.

The balanced distribution in the bitcoin derivatives market suggests that traders are not expecting any major moves in the price of Bitcoin in the near future. This is likely due to the uncertainty surrounding the SEC’s decision on whether or not to approve a spot Bitcoin ETF.

A Green Light?

On the bright side, optimism hasn’t completely faded away. In fact, the SEC allegedly edge closer to the spot ETF’s approval, following years of applications and regulatory deliberations. The potential approval could mark a major milestone in the sector, opening up new opportunities for investors seeking exposure to digital assets.

One of the notable contenders in this race is BlackRock, the world’s largest asset management firm, which submitted its Bitcoin ETF application in June, joining a growing list of hopefuls.

The company’s application gained further traction as it forged a “surveillance-sharing agreement” in partnership with cryptocurrency exchange Coinbase. This agreement could potentially enhance transparency and market surveillance, a factor that might tip the scales in favor of SEC approval.

ARK Invest, another prominent investment firm, is also among the entities with a cryptocurrency ETF application pending in the SEC pipeline, underscoring the industry-wide interest in bringing a spot crypto ETF to market.

The SEC has never previously greenlit a spot Bitcoin ETF proposal from any firm in the US. This cautious stance is due to the intricacies involved in holding Bitcoin within an ETF fund, allowing for more direct investor exposure.

There is a growing sense of optimism within the cryptocurrency community that the SEC will eventually provide the long-awaited approval. Such a decision would have far-reaching implications, as it would grant investors an accessible avenue to gain exposure to Bitcoin’s potential without the need to directly purchase and store the cryptocurrency.

The final decision is not being rushed, especially since the roles of the SEC and CFTC in regulating digital assets are still being discussed. At some point, an ETF product will come to US markets, but when it happens is anyone’s guess.