- Bitcoin fails to retain its Grayscale gains.
- Market sentiment has been on a rollercoaster ride.
- The SEC added to market uncertainty by delaying decisions on spot Bitcoin ETFs.
Crypto market sentiment has a long-established history of rapid swings between bearishness and bullishness. This fickleness was displayed following Grayscale’s legal victory over the Securities Exchange Commission (SEC) this week. Although the price of Bitcoin initially surged in response to the news, just days later, pessimism set in once again as the top cryptocurrency failed to hold onto its gains.
Bitcoin Retraces Grayscale Gains
On August 29, the US Court of Appeals sided with Grayscale in its legal battle to convert the Grayscale Bitcoin Trust into a spot ETF. The price of Bitcoin soared to $28.2k, posting a 12-day high and bringing a wave of renewed optimism.
Hope soon turned into despair, as Thursday saw the SEC deferring decisions on several spot BTC ETF applications. Bitcoin experienced a sharp drop to $25.7k in response to the SEC’s move. Crypto Analyst Miles Deutscher remarked that BTC took just 50 hours to retrace its “Grayscale victory pump,” likening the event to XRP’s fleeting price boost following Ripple’s win over the SEC in July.
Deutscher asserted that the situation was a sign of underlying weakness, calling it “a telling sign of the market.”
Over the last 24 hours, Bitcoin experienced a peak-to-trough loss of 6.8% and has been ranging in a narrow band between $25,900 and $26,080 since Friday’s opening (BST). At the time of writing, the top cryptocurrency is priced at $25,990.
Chiming in on the situation, The Bitcoin Therapist turned to humor by posting a meme that played on the well-worn adage of Bitcoiners having to get a “real job” now crypto is “finished.”
Likewise, YouTuber Nebraskangooner expressed amusement at Bitcoin giving up its Grayscale gains, commenting: “This is absolutely hilarious tbh”.
While the crypto community took delight in the SEC being cut down to size over its handling of Grayscale’s spot BTC ETF application, the agency seems determined to have the last say.
SEC Delays Spot ETF Decisions
Not to be outdone, the SEC poured cold water on crypto bullishness by opting to defer Invesco, Valkyrie, Fidelity, and WisdomTree’s spot Bitcoin ETF applications. The securities agency was due to give its verdict on September 4th but will now update on its decisions in October.
Earlier this week, Associate Director of Research and Head of Sector and Industry Research at VettaFi, Roxanna Islam, predicted that the SEC would delay their decisions following the deferral of Ark 21Shares’ application in August. Islam further commented that the industry remains in the dark regarding how the SEC will respond to its defeat at the hands of Grayscale.
Voicing pessimism over the prospects of spot BTC ETF ever being granted, Coin Bureau referenced undisclosed sources to reveal that “… they need more time to come up with another excuse to deny the applications.”
On the Flipside
- Bitcoin price volatility aligns with past movements, making the Grayscale retracement an expected event.
- The US regulatory landscape remains uncertain, acting as a headwind to price appreciation.
Why This Matters
Bitcoin’s failure to hold onto its Grayscale gains indicates an underlying weakness in demand.
Read about the short-lived Bitcoin bullishness following Grayscale’s legal victory here:
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