What is the reason for the current decline in the cryptocurrency market?
Today, the cryptocurrency market is experiencing a downturn, leading to long liquidations totaling over $160 million. This decline is fueled by apprehensions that the U.S. Securities and Exchange Commission (SEC) might postpone decisions on various pending applications for spot Bitcoin exchange-traded funds (ETFs).
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Crypto Market Downturn: Over $160 Million in Long Liquidations
Today, the cryptocurrency market is witnessing a downturn, marked by long liquidations exceeding $160 million. The primary catalyst behind this decline is growing apprehension that the U.S. Securities and Exchange Commission (SEC) may opt to delay decisions on various pending applications for spot Bitcoin exchange-traded funds (ETFs). Investors and money managers are adjusting their strategies, anticipating potential consequences if the SEC chooses to postpone the current spot Bitcoin ETF applications.
Cryptocurrency market performance, 30-day chart: Coin360
SEC Review and Anticipation of Delays
The crypto market's decline aligns with a crucial week when the SEC is expected to review several spot Bitcoin ETF applications. Key decisions revolve around applications from Hashdex and Global X ETFs, scheduled for November 17, and Franklin Templeton's Bitcoin ETF application, set for November 21. Analysts predict another delay in light of recent events, including a fake BlackRock XRP trust filing. Such incidents raise concerns about potential price manipulation in the crypto industry, impacting the SEC's stance on ETF approvals.
Bitcoin historical returns by month. Source: Newhedge
Waning Euphoria and Regulatory Uncertainty
Market sentiment, which surged earlier in November due to optimism about a potential Bitcoin ETF approval, is diminishing. The excitement surrounding the possibility of ETF approval drove Bitcoin prices to 18-month highs above $38,000. However, the SEC has already delayed Hashdex's application for a spot Bitcoin ETF conversion, and further delays are expected. The SEC's recent delay in deciding on Grayscale's Ether futures ETF has fueled speculation, contributing to regulatory uncertainty affecting the broader cryptocurrency market.
**Derivative Market Liquidations and Market Challenges**
The decline in major cryptocurrencies has triggered a surge in liquidations across the derivative market, with over $160 million in long positions liquidated in the past 24 hours. Futures liquidations have exerted selling pressure on the crypto market, negatively impacting prices.
Crypto market liquidations. Source: Coinglass
Despite the market downturn, select altcoins have demonstrated resilience and performed well. The cryptocurrency market faces multifaceted challenges in the short term, with economic and regulatory factors influencing its trajectory.
