In a sudden turn of events, Bitcoin (BTC) experienced a sharp decline of 6% as the Securities and Exchange Commission (SEC) returned applications for the first Bitcoin spot exchange-traded funds (ETFs). The rejection temporarily sent BTC’s price plummeting to $29,500, causing concerns among market participants.
The SEC’s decision to return the ETF filings was attributed to a bureaucratic error related to the lack of information about the surveillance-sharing agreements with spot bitcoin exchanges. However, observers believe that this rejection is merely a technicality and expect asset managers such as BlackRock and Fidelity to refile their applications, naming Coinbase as their designated exchange.
Financial commentators offered varying perspectives on the situation. Some interpreted the SEC’s move as an indication of what needs to be done to obtain approval, potentially signaling a positive outcome. Nevertheless, the market reacted anxiously, prompting a dip in BTC’s value.
Coinciding with these developments, Bitcoin encountered losses of over $1,000 compared to its previous highs. This decline occurred at a crucial moment, with the monthly and quarterly candle close approaching. Additionally, macroeconomic data further added to the confusion in risk asset markets. The Personal Consumption Expenditures (PCE) Index printed lower than expected, marking its most significant drop in a year.
Despite signs of inflation slowing, market participants began pricing in a higher chance of interest rate hikes in July. The CME Group’s FedWatch Tool indicated nearly 90% odds of a 25-basis-point hike. Critics argued that inflation remains a significant concern, with core PCE inflation at 4.6%, unchanged since December 2022.
Market volatility and regulatory decisions continue to influence cryptocurrency markets. Investors are advised to conduct thorough research and exercise caution when making investment and trading decisions.