The cryptocurrency market is experiencing a downturn, with Bitcoin and altcoins facing selling pressure. Investors and money managers are closely monitoring the potential impact of the SEC’s decision on spot Bitcoin ETF applications, expected on November 17. As the market grapples with uncertainties, key factors contributing to the downturn are surfacing.
Spot ETF Euphoria Fades: The optimism surrounding a potential spot Bitcoin exchange-traded fund (ETF) approval in November drove market sentiment and pushed Bitcoin to an 18-month high above $38,000. However, this euphoria is waning, with Bitcoin prices dropping nearly 2% for the week of November 17. The SEC’s recent delay in deciding on Hashdex’s spot Bitcoin ETF conversion has added to the market’s apprehension.
SEC’s ETF Application Reviews: The SEC is expected to review pending spot Bitcoin ETF applications from Hashdex and Global X ETFs by November 17, with Franklin Templeton’s Bitcoin ETF application deadline on November 21. Speculation of another delay is growing, exacerbated by a fake BlackRock XRP trust filing that caused market turmoil. This incident may support the SEC’s concerns about price manipulation in the crypto industry, potentially impacting the chances of a spot Bitcoin ETF launch.
Futures Liquidations Exacerbate the Downturn: The decline in major cryptocurrencies triggered a wave of liquidations in the derivative market. In the past 24 hours, over $161.4 million in long positions were liquidated, with $54 million wiped out in the previous 4 hours. Crypto market prices are adversely affected when long derivative positions are liquidated without sufficient buying pressure.
Market Reaction and Future Outlook: Traders are likely securing profits at the current multi-month high prices amidst the anticipation of a prolonged wait for a spot Bitcoin ETF. The market’s short-term trajectory will be shaped by the interplay of economic and regulatory factors, with ongoing uncertainties influencing investor sentiment. As the SEC’s decision looms and derivative market dynamics evolve, the crypto market remains in a state of flux, navigating challenges that will define its path in the coming weeks.