Element Group Analyst: Crypto Market is Boring, Has No Juice and Blames Bitcoin ETF Rejections
Crypto Market Has Become Bring In Recent Weeks
This week, bitcoin has been trading range bound within a 10% band over the past few weeks. This is something you expect to see for a small or mid-cap stock, not an asset that previously exhibited annual volatility levels closer to 100%.
One can argue that the depressed volatility patterns we’re seeing with bitcoin are the market slowly adopting bitcoin as a SoV. One can also argue that bitcoin price discovery is becoming more efficient due to more natural demand and natural supply.
But, Element Group, a cryptocurrency economics, and digital assets solutions analyst think that the SEC’s delay in approving bitcoin ETF proposals is the primary reason why the market has become so boring in recent weeks.
Bitcoin’s price is reliant on the SEC’s approval or refusal of bitcoin ETF proposals. This year, ten ETFs were rejected by the SEC — the Winklevoss BTC ETF in July and the rest of the nine ETFs in August. The only proposal that remains unanswered is the VanEck/SolidX bitcoin ETF.
When the SEC delayed the decision in September, it caused a disturbance in the bitcoin market. However, the price stabilized once investors figured out that the decision could be positive in the future. The report noted that the pending decision has resulted in a dull market.
On Aug. 8, the SEC postponed the decision by extending the 45-day time period. Back then, the agency wrote that the final decision would arrive on Sept. 30. Since the decision was extended on Sept. 20, analysts expect the SEC to utilize all the extensions (maximum of 240 days). If this happens, the final decision will arrive in late February.
The report ends by stating:
“Our conclusion is that market participant should be open to the possibility that a bitcoin ETF will not be approved in the next one or two years. To the extent that some possibility of approval is priced in, the market could experience material weakness if a disapproval order is issued.”