The bitcoin price went into freefall this morning, despite good news for bitcoin adoption from the growing Lightning Network, as investors get cold feet ahead of the U.S. Security and Exchange Commission’s (SEC) decision expected later this month on whether to grant approval for a bitcoin exchange-traded fund (ETF) — something the SEC has previously rejected due to fears around bitcoin’s wild price swings and price manipulation.
Bitcoin fell by some $500, or 5%, in just a matter of minutes, according to CoinDesk data, and taking the bitcoin price under the psychological $7,000 mark.
Bitcoin bulls are also trying to hang on until early November, when the New York Stock Exchange’s parent company, Intercontinental Exchange (ICE), plans to roll out a bitcoin ETF as part of its cryptocurrency platform Bakkt and in partnership with coffee chain Starbucks, software giant Microsoft, and Boston Consulting Group.
Yesterday, CEO of crypto payment startup Abra told CNBC the reason the SEC has insofar denied crypto ETF is because the crypto industry does not fit the applicant archetype.
Bill Barhydt suggested that the SEC has rejected crypto ETF applications because “people who are doing the applications don’t fit the mold of who the SEC is used to approving.”
It’s been suggested that the introduction of a registration process for popular instant bitcoin exchange ShapeShift may have spooked some users and “added fuel” to the sell-off.
Bitcoin climbed to an eye-watering near $20,000 late last year but has been heavily sold off throughout 2018, dropping to year-to-date lows of around $5,800 and sparking a wider sell-off of the wider cryptocurrency market.
Elsewhere, other major cryptocurrencies including Ethereum’s ether, ripple, bitcoin cash, and EOS were also hard hit this morning — all falling at least 10%.
The fortunes of most cryptocurrencies have been closely tied to bitcoin this year. Ethereum’s sell-off has been largely attributed to the huge number of initial coin offerings (ICOs) that went live on Ethereum’s blockchain last year, with many of those investors bailing out throughout 2018.