Volatility has been linked with the world of cryptocurrencies since the inception. Within the past year we have seen bitcoin cross the horizon of $20,000, and we have also seen it dropping down below the mark of $6,000. As soon as bitcoin starts rising up and promises a bullish run, a bearish run also becomes inevitable. The vice versa scenario is also applicable to this trend. This is just the way this market operates.
After a prolonged bearish run, in the past week we have seen the entire crypto market rise up as a whole. This trend is continuing and bitcoin along with other major cryptocurrencies is showing a bullish trend once again. After dropping down below that mark of $6,000 in mid-August, it has rose back up and at the time of writing, it is currently floating around the value of $6,750, as per CoinMarketCap.
In the past 24 hours, bitcoin has seen a rise of around 0.58% in its market value. Along with this, other cryptocurrencies are also rising up in the ranks. Ethereum has shown an increment of 0.81% in its price value in the past day. XRP rose up by a percentage of 1.22. BCH, EOS, XLM and LTC are also showing green signals since the past 24 hours. This means that the overall market capitalization by cryptocurrencies is again rising up after dropping down considerably. Here is the price graph for bitcoin for the past month. After dropping below the $6,000 mark, bitcoin can be seen to be rising up again.
This trend is seen in the hindsight of the recent exchange traded-fund proposal rejections from the United States Securities and Exchange Commission (SEC). Despite the rejection of ETF proposals, the crypto market as a whole is holding its ground.
Although the crypto market is showing bullish trend right now, but in order to promote and ensure market stability, the establishment of exchange traded-funds for cryptos seems necessary. The SEC has been reluctant about approving the establishment of a crypto-linked ETF as of yet. The major reason behind this being the prevalence of manipulative and fraudulent practices in the crypto world. The SEC believes that the market is very much unregulated at the moment, and the mitigation of illegal practices across the crypto space is necessary for the protection of its investors.
The concerns regarding the establishment of a crypto-linked ETF were put forward by the regulatory body back in January. Unless these concerns are handled properly, the establishment of a bitcoin ETF seems unlikely. The major reasons that were presented forward by the regulatory body were regarding valuation, liquidity, custody, arbitrage and potential manipulation and other risks associated with the crypto market. Concerning manipulation, the regulatory body stated that:
The Commission has also discussed concerns relating to the risk of fraud and manipulation in cryptocurrency markets in orders denying exchange proposals to list the shares of commodity trusts that would hold cryptocurrency. In addition, a number of recent media reports have highlighted a range of possible vectors for potential manipulation of cryptocurrency markets. Although some funds may propose to hold cryptocurrency-related products, rather than cryptocurrencies, the pricing, volatility and resiliency of these derivative markets generally would be expected to be strongly influenced by the underlying markets.
But since most of the proposals presented in front of the SEC do not properly handle these concerns, the SEC has not been forgiving in any way. Almost all of the proposal presented forward have been rejected. The main reason behind these rejections again being the prevalence of manipulative and fraudulent activities. In the rejection presented forward to the proposal made by Winklevoss twins regarding the bitcoin ETF, which was also backed by Bats BZX, the SEC stated that:
Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin or blockchain technology more generally has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.
In a nutshell, although the establishment of a bitcoin ETF is necessary for attracting institutional investors, it seems that bitcoin is not going to vanish even without an ETF. It is here to stay as evident from its bullish behavior.