ETF triggered the ‘extreme painting door’ of BTC Grayscale wins the lawsuit and surges to $2.8, while the SEC delays the decision and smashes through $26,000.

ETF triggers BTC's 'extreme painting door', Grayscale wins lawsuit and surges to $2.8, while SEC delays decision and smashes through $26,000.

Original | Odaily Planet Daily

Author | Loopy Lu

On August 30th, Grayscale won the lawsuit against the SEC. The market surged, and Bitcoin briefly broke through $28,000. With Grayscale’s legal victory, people have high hopes for “the approval of a spot Bitcoin ETF in the United States,” and this “ambition” in the crypto world seems within reach.

However, just under 48 hours after Grayscale’s victory, unexpected changes occurred.

The U.S. Securities and Exchange Commission (SEC) announced today that they need to delay the approval time for a Bitcoin spot ETF, at least delaying the three spot ETFs proposed by WisdomTree, Valkyrie, and Invesco. The decision on these products will be postponed until mid-October at the earliest.

Tomorrow and tomorrow and tomorrow,

This is not the first time the SEC has delayed a Bitcoin ETF recently.

In mid-June, BlackRock submitted an application for a Bitcoin spot ETF, triggering a clear bullish sentiment in the cryptocurrency market. In late July, the SEC began reviewing whether to approve or reject the listing applications for six Bitcoin spot ETFs, including BlackRock. (Note: These specifically include BlackRock’s iShares Bitcoin Trust, Fidelity’s Wise Origin Bitcoin Trust, WisdomTree Bitcoin Trust, VanEck Bitcoin Strategy ETF, and Galaxy Bitcoin ETF by ProShares.)

Usually, when it is published in the Federal Register, the SEC will formally initiate the review. The review period is usually 45 days. However, the review period can be extended.

Therefore, postponing the review results has become a trick that the SEC “never fails to try.”

This year’s “ETF wave” can be traced back to ARK led by Cathie Wood. As early as May 15th, ARK 21Shares Bitcoin ETF was published in the Federal Register. BlackRock, managing over $9 trillion, applied for a Bitcoin ETF in June, causing a small wave of excitement in the industry. On July 19th, the SEC published the proposal for the fund in the Federal Register, starting the 45-day countdown for the committee to make a ruling on the product.

However, the SEC has still not made a decision on these ETFs.

On August 11th, the SEC once again extended the review period for the Bitcoin ETF applications from Ark Investment Management and 21Shares. According to the SEC’s review rules, the review can be extended for up to 240 days.

Of course, today’s delayed ETF application is similar. The SEC document stated that the ETF application submitted by WisdomTree has been postponed to October 17th.

The SEC seems to be trying its best to delay making a final decision and has not provided specific reasons for the delay. “The Commission believes that designating a longer period is appropriate for the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.”

Market Downturn, Confusing Market Trends

With the continuous delay by the SEC, the market has once again made pessimistic predictions about the overall market.

According to Coinglass data, Bitcoin liquidated $48.89 million in the past 24 hours, and ETH liquidated $28.76 million.

During the longest review period of 240 days, there are some key milestones that decisions have to be made: 45 days, 45 days, 90 days, 60 days. If the SEC delays three times, it will have to make a final decision – approve or reject. After 240 days, the SEC will not be able to delay the decision any further according to the process.

The change in market expectations has also resulted in a perfect “gate” shape in the candlestick chart, with Bitcoin price falling below $26,000 at one point. People can’t help but wonder when the ETF matter will finally settle.

Even before this delay, some analysts had predicted the occurrence of this delay. Bloomberg analyst James Seyffart stated on August 15th that he believes the review deadline in early September may not see the result of the review. He believes that this review is bound to be delayed, and he is more concerned about the final deadline of January 10th.

Grayscale’s Victory, Whales Profit

From the market trends, Grayscale’s legal victory is a high point of strong stimulation for this round of ETF narrative.

However, as the facts gradually become clear, people begin to doubt whether Grayscale’s victory is really a victory for BTC. Although Grayscale has won a judicial victory against the SEC, it does not mean that Grayscale’s GBTC will be approved for conversion to a spot ETF.

Bloomberg TV analyst Sonali Basak said, “This does not mean that GBTC will automatically convert to an ETF immediately. As the court said, it only means that the U.S. SEC failed to explain why it approved Bitcoin futures ETPs instead of the product proposed by Grayscale (spot ETF).” She added that a long process is still needed, including a 45-day appeal period, during which both parties will review the ruling, and the SEC can also request a full hearing. “It is currently unclear whether Grayscale needs to resubmit its application to convert GBTC into an ETF.”

In simple terms, the court only believes that the SEC’s rejection process for Grayscale was not in compliance with the rules, that’s all. After going through the review process again, the SEC can still reject Grayscale’s application with other reasons. However, such a news with ambiguous significance has brought strong stimulation to the market.

And when we look back at the period before Grayscale’s victory, it is not difficult to find that whales were continually positioning themselves and making substantial profits.

Santiment monitoring data shows that wallets holding 10-10,000 BTC increased their holdings of BTC by nearly $400 million on the day before the news of Grayscale’s victory was announced. Although lacking evidence, people still suspect that whale addresses may have known the outcome of the Grayscale and SEC lawsuit in advance based on their trading activities.

The victory of Grayscale seems to have created an opportunity for the whales to exit. Before the victory of Grayscale, nearly 30,000 BTC were transferred to CEX, with a market value of $822 million.

On August 29th, Markus Thielen, the research director of Matrixport, a cryptocurrency financial company owned by Wu Jihan, said, “We will go long on Bitcoin and strictly stop loss. We expect the US Treasury yields to decrease and US tech stocks to rise.”

“buy the rumor, sell the news”

Trading based on news is always risky, as it is difficult for people to react immediately at the first disclosure of news.

In just 48 hours, the market has experienced a roller coaster ride and returned to its original state. Some whales may have completed their profits, while other retail investors have experienced significant liquidations.

Eric Balchunas, a senior ETF analyst at Bloomberg, believes that he would not be surprised if the SEC delays the ETF application. He believes that the timeline for the review period is not important. “The SEC may still make concessions at some point, and we will eventually see these applications approved.” He predicted that the probability of launching a Bitcoin spot ETF this year is 75%, and the probability of launching it by the end of 2024 is as high as 95%.

As the influence of ETF comes to an end, the market is once again heading towards pessimism. Although many people believe that the approval of a Bitcoin spot ETF could bring a huge surge to the market, this event is still too far away from us.

As September approaches, the market is turning negative again. Historically, September has been the worst-performing month for Bitcoin. Since 2013, there have been only two profitable September months (2015 and 2016), while the rest of the years have been losses.

Perhaps we still need to have a longer-term patience for the overall market trend. There are no potential major positive events expected in September, but in October, the potential approval of Ethereum futures ETF could be the next significant event to drive the market.