Why is the crypto market down today?
Today, the cryptocurrency market faces a downturn, experiencing a decline in prices, as the positive catalysts that earlier propelled Bitcoin and altcoins to reach their highs in 2023 begin to lose their influence on market sentiment.
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The current price action in the cryptocurrency market is predominantly bearish as investors and fund managers assess the potential consequences of a delay in the approval of spot Bitcoin (BTC) exchange-traded fund (ETF) applications by the United States Securities and Exchange Commission (SEC) on November 17.
The optimism surrounding the potential approval of a spot Bitcoin ETF in November had significantly boosted market sentiment, propelling Bitcoin's price to an 18-month high above $38,000. However, this enthusiasm appears to be waning, with BTC experiencing nearly a 2% decline in the week of November 17.
Anticipation for positive news on spot ETFs this week is diminishing, particularly after the SEC already postponed its decision on Hashdex's application for a spot Bitcoin ETF conversion on November 15. While BlackRock contends that the SEC lacks legitimate reasons to disapprove a cryptocurrency spot ETF, indications suggest the SEC may opt for a delay.
On the same day, the SEC delayed its decision on Grayscale's Ether futures ETF. Some analysts speculate that Grayscale's 19b-4 form submission could be a potential "trojan horse" for the agency.
The current decline in the crypto market coincides with the SEC's anticipated review of several pending spot Bitcoin ETF applications. Notably, the SEC must decide on applications from Hashdex and Global X ETFs by November 17, and Franklin Templeton's Bitcoin ETF application by November 21, with a potential extension to 2024 if not decided by then.
Market expectations lean toward another delay, particularly in the wake of a fake BlackRock XRP trust filing that caused substantial price fluctuations in the XRP markets and triggered an investigation request to the United States Department of Justice. This incident could potentially undermine the chances of launching a spot Bitcoin ETF in the U.S., supporting the SEC's claims of price manipulation in the crypto industry.
Currently, traders may be securing profits at the current multi-month-high prices in the crypto market due to the expected prolonged waiting period. The decline has prompted significant liquidations in the derivatives market, with over $161.4 million in long positions liquidated in the past 24 hours, contributing to the negative impact on crypto market prices when long derivative positions are liquidated without sufficient buying pressure from trading volume.
In the short term, the cryptocurrency market is likely to grapple with multifaceted challenges, and the interplay of various economic and regulatory factors will continue to shape its trajectory in the coming days.
