Over the past 24 hours, the crypto market has dropped slightly in value, led by the 4 percent decline in the Bitcoin price. Ethereum, Ripple, and Bitcoin Cash fell by 5 percent.
The majority of analysts in the space have attributed the recent fall in the Bitcoin price to the rejection of several Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC).
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Almost immediately after the decision of the US SEC was released, the Bitcoin price dropped from $6,400 to $6,250. But, the market rebounded relatively quickly back to $6,450, showing some stability in the lower range of $6,000.
Bottoming Out at $6,000
As BitMEX CEO Arthur Hayes previously said, it is possible for Bitcoin to test the $5,000 region before initiating a rally. But, whether it is $5,000 or $6,000, what investors like Hayes emphasized is that Bitcoin will need a period of stability before it initiates a proper mid-term recovery and rally.
Bitcoin has shown the highest level of stability in the past 14 months in the month of August, remaining in the mid $6,000 region since August 8. While the price of BTC has been volatile in the mid-$6,000 region, it has been able to maintain stability in the $6,000 to $6,500 range.
The immediate recovery of BTC from the ETF disapproval by the US SEC was a positive sign of market stability and awareness, as most investors were aware that the ETFs which were rejected by the SEC were tradable instruments based on derivatives.
Structurally and conceptually, the ETFs filed by ProShares and Direxion are different from the ETFs filed by the Chicago Board Options Exchange (Cboe) and VanEck. The ETFs filed by Cboe and VanEck are said to have the highest probability of being approved by the SEC due to their decades of track record and the structure of their ETFs that are equipped with insurance, transaction monitoring, and transparent pricing system.
In early August, Kelly said that Bitcoin ETFs will be postponed to their final deadline in February of next year and given that there exists no incentive or reason for the SEC to aggressively approve the first Bitcoin ETF in the market, he said that investors should expect all ETFs to be delayed up until that point.
Kelly added that if the market falls because of ETF disapproval, then investors are overreacting, because ETFs will hit the US markets eventually.
“It [Bitcoin] has had a tremendous run off of $5,800, and that was all really because people thought there was going to be a Bitcoin ETF. The SEC came out and postponed that decision. A little spoiler alert, on September 30, SEC will likely postpone in again, because the market is not ready for it and the SEC hasn’t had the answers to their questions yet,” Kelly said at the time on CNBC’s Fast Money.
So Where Does the Market go Next?
As Bitcoin dropped by 4 percent, other major cryptocurrencies and tokens recorded a big hit, as some digital assets like Stellar, DigiByte, Ontology, and Nebulas fell by 10 to 15 percent.
In the short-term, it is likely that Bitcoin will remain in its current price range of mid-$6,000, which will be beneficial for the market in the long run.
Featured image from Shutterstock. Charts from TradingView.