Bitcoin (BTC) has experienced large volatility during the last few weeks. Although traders can be very excited about it and can profit from it, it is certainly not good to convince U.S. SEC commissioners to approve a Bitcoin ETF. Could this volatility affect Bitcoin negatively?
Bitcoin ETF Decision
Ten days ago, Bitcoin dropped to $6,400 in just a few minutes from over $8,000. This price action was triggered by a 5,000 BTC sell-off. At that time, this equalled $35 million and generated a flash crash of 20%. However, things changed in a very fast way. A few minutes later, Bitcoin bounced to $7,500 and was traded between this price and $8,000 for over a week.
This sell order that caused Bitcoin’s price to drop on Bitstamp had a negative effect over BitMEX. BitMEX relied on Bitstamp’s feed until May 20, thus, this price action liquidated a large number of contracts.
After this situation, BitMEX added Kraken to its index in order to reduce the chances of manipulation.
About it, the BitMEX team commented:
“Effective 22 May 2019 at 04:00 UTC, Kraken will be reintroduced into several of BitMEX’s Altcoin and Bitcoin Indices. This update is a reflection of a change in our Kraken market data feed handler from using Kraken’s REST API to their new Websocket API.”
This price action can have a negative effect on a Bitcoin ETF approval in the future. Eric Conner, Gnosis product developer, suggested on Twitter that if a whale is able to crash the entire crypto market an ETF is far from being approved.
A whale crashes the entire crypto market 20% in 5 minutes with a single sell order on the books and people actually think an ETF is coming? 🤣
— Eric Conner (@econoar) May 17, 2019
The U.S. Securities and Exchange Commission (SEC) has been working in order to approve a Bitcoin ETF. However, this didn’t happen until now. Commissioners continue their discussions about how Bitcoin should be regulated and how mature the market should be. Market manipulation and volatility are some of the main concerns of those commissioners against the approval for an ETF.
Each of the ETF rejections in the past cited market manipulation and unregulated exchanges. Crypto platforms will have to work in order to make sure that these things do not happen again. In a recent interview with Cointelegraph, Gabor Gurbacs, the director of digital asset strategy at VanEck said that millions of U.S. citizens trade and hold Bitcoin on an exchange and a regulated ETF would protect retail investors.
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