SEC Still Doesn't Recognize Bitcoin Despite Approving Spot Bitcoin ETFs
US Securities and Exchange Commission Chairman Gary Gensler reiterated that his agency still does not recognize Bitcoin — despite approving 11 spot Bitcoin ETFs on January 10.
Gensler reiterated his agency's stance on cryptocurrencies, contrasting the "speculative" nature of Bitcoin with the utility of precious metals such as gold, silver and platinum. He added that the regulator remains “neutral” and does not take a biased view on the specific companies, investments or assets behind an ETF product.
Additionally, Gensler said that Bitcoin is still frequently used in nefarious and illegal activities.
“While we take a neutral stance, I note that the underlying assets in the metals ETF have consumer and industrial uses, whereas Bitcoin in contrast is primarily an investment asset. volatile engine, is also used for illegal activity including ransomware, money laundering, sanctions evasion and terrorist financing."
“Investors should be cautious about the numerous risks associated with Bitcoin and products with value tied to cryptocurrencies,” Gensler added.
Once again, Gensler reiterated his agency's position that the “vast majority” of crypto assets are investment contracts and should fall under the SEC's regulatory jurisdiction. In separate lawsuits against Binance and Coinbase, the regulator listed a total of 68 crypto assets that it considered securities.
The momentum that drove Bitcoin (BTC) prices to over $49,000 in 2024 appears to be waning, with BTC prices hitting a year-to-date low on January 15.
The drop in Bitcoin prices comes as investors in the United States flock to institutional investment products following the approval of spot ETFs.
BITCOIN ETF SPOT REVERSES VOLATILITY TREND
Bitcoin price skyrocketed to $49,000 when the first Bitcoin spot ETF launched and began trading on January 11.
Days before the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs on January 10, the agency approved 11 institutional products, the implied market volatility began sudden increase. The 97% 1-week volatility is more than three times the October 2023 low.
The reason for the market volatility may be partly due to futures and options markets reaching multi-year highs. In the week since the Bitcoin ETF spot launched, both markets have seen volume increase to a total of $13.6 billion with $3.4 billion worth of positions closed.
BITCOIN LIQUIDATION INCREASES STRONGLY
A strong movement in the Bitcoin futures market can be noted by looking at liquidations. The prolonged liquidation coincided with increased volatility. During a 24-hour period on January 17, more than $27 million in long and short positions were liquidated. Bitcoin long position liquidations accounted for the majority of the daily figure, with $19.5 million removed from the market.
When BTC long positions are liquidated without buying pressure from traders, Bitcoin price will be negatively affected. Bitcoin trading volume has dropped more than $12 billion from its January 10 peak of $21.2 billion in daily activity.
The drop in trading volume on the exchange comes as spot Bitcoin ETFs recorded daily volumes three times the volume of all 500 institutional ETFs combined launching 2023 on January 16.
SHORT-TERM HOLDERS ARE INCREASING PRICES
Despite the Bitcoin price drop on January 17, net unrealized gains bounced from a 1-month low on January 13.
Long-term (LTH) holders appear to be reducing risk and locking in profits as their holdings fall 75,000 BTC from the all-time high set in November 2023. Block drop Trading volume combined with an increase in short-term holders (STH) could lead to further declines in bitcoin prices.
To date, Bitcoin price continues to be directly influenced by macroeconomic events and it is also likely that further regulatory actions as well as Federal Reserve monetary policy will continue to have a number that affects BTC price.
In the long term, market participants still expect Bitcoin prices to recover, especially as more and more financial institutions adopt BTC.
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