Bitcoin slips and loses $26,000 after SEC's blow to ETFs

Sharp turnaround in the cryptocurrency market. Bitcoin (BTC) has plummeted nearly 5% in the last 24 hours and lost $26,000, while Ethereum (ETH) has dropped more than 3% and stands at around $1,630.

The optimism following Grayscale's court victory over the Securities and Exchange Commission (SEC) has quickly turned to caution. To find the reason for this turnaround one must look to the SEC itself, which yesterday extended by 45 days the deadline for deciding whether or not to approve spot BTC exchange-traded funds (ETFs) proposed by BlackRock, WisdomTree, Valkyrie and other companies. Now, the regulator has delayed until mid-October, between the 16th and 19th, the date for deciding what to do with each of these investment products.

The Commission has a total of 240 days from the start of the review of applications to make a final approval or denial decision. Traditionally, the regulator has used every possible comment and review period to delay making final decisions until those 240 days have elapsed, so these decisions were to be expected.

It is worth noting that the SEC could again extend the deadline to respond to each of these requests, given that it began the ETF review process in mid-July. Most experts believe that the regulator will not respond to these requests until well into the first quarter of 2024. Recently, 'Bloomberg' analysts, Eric Balchunas and James Seyffart, raised the likelihood of the SEC approving a spot BTC ETF in 2023 by 10 percentage points to 75%, although they cautioned that a delay was likely.

Be that as it may, what is certain is that cryptocurrencies, especially Bitcoin, have returned to the levels at which they had been moving before the rally originating after the Grayscale victory. Similarly, the Fear & Greed Index is back in "fear" territory, at 35 points.

A downward reading of this benchmark can indicate "extreme fear" which can be interpreted as a sign that investors are overly concerned and is often understood as a buying opportunity. On the contrary, a broad "greed" sentiment may indicate that the market is about to undergo a correction.

Separately, cryptocurrency exchange Binance announced that it will gradually stop supporting the Binance USD stablecoin (BUSD) after its issuer, Paxos, was sued by the SEC earlier this year as it considered the token to be a security. It should be noted that Paxos has not minted new BUSD since late February.

Similarly, a US court noted that both Bitcoin and Ethereum fall into the category of commodities by dismissing a class action lawsuit against cryptocurrency exchange Uniswap. This ruling is particularly interesting because Judge Katherine Polk Failla is the judge overseeing Coinbase's case against the SEC, a proceeding in which the regulator avoided defining ETH in the same terms the magistrate used.

In the rest of the market, there are outstanding falls of between 3% and 4% in most of the large altcoins such as Cardano (ADA), Solana (SOL), Ripple (XRP) or Dogecoin (DOGE).