SEC Rejects Bitcoin ETF

The Securities and Exchanges Commission decided to reject the first US bitcoin ETF. Prices initially crashed on the decision but quickly recovered. Litecoin fell on the ETF decision as well but it later recovered all losses.

SEC Rejects Bitcoin ETF

The US Securities and Exchanges Commission decided to reject a rule change that would permit the listing of the first US bitcoin ETF. Prices initially crashed by over $200, from $1246 to a low of $1,040 on FXOpen. Other exchanges saw similar 20% declines.

btcusdh4-mar14-copy

But as you can see on the chart above, the drop was used by bulls to ‘buy the dip’. We’re currently quoted at $1,223 on FXOpen/BTC-E, only 1.8 percent below the pre-ETF news price.

According to the SEC, a major reason for disapproving the ETF was the influence of unregulated markets on the bitcoin price. Gemini, the exchange that was to be used as a reference point for the ETF, is itself regulated but large swaths of the overseas markets remain unregulated.Therefore, the SEC continues:

”As the Exchange has not entered into, and would currently be unable to enter into, the type of surveillance-sharing agreement that has been in place with respect to all previously approved commodity-trust ETPs, agreements that help address concerns about the potential for fraudulent or manipulative acts and practices in this market”

This means that all other bitcoin ETFs in the pipeline are now dead in the water as well, at least for the foreseeable future.

With the break below the $1,100 mark we are now back into neutral mode. A new rally requires a breakout above this month’s high. While this is $1,269 on FXOpen, on other exchanges prices spiked to $1,330-$1,360 on Friday before the news release. On the lower end we have support at the ETF spike low of $1,040. But a new downtrend will not be in place until the $1,000 round figure is taken out on the major BTC exchanges.

Litecoin Remains in Rally Mode

Litecoin prices fell along with bitcoin on the ETF decision. But they have since rebounded strongly. Yesterday we got a major move from $3.85 to a high of $4.48 but things cooled off later on. No news can be attributed to this rally. We are currently quoted near the 50% retracement of yesterday’s move.

ltcusdh4-mar14-copy

To end the current uptrend the bears will have to push LTC/USD back below the post-ETF lows at $3.67 dollars per coin. This would also start a new LTC downtrend. Above current prices weak resistance can be found at the March 2nd swing high of $4.32, closely followed by yesterday’s high at $4.48 and the $4.50 round figure.

Petar Kotevski

Petar is a forex trader and writer with 9 years of experience in financial markets. He has been following bitcoin since 2010. A year ago, as the BTC market matured, he started getting more involved by writing articles on bitcoin and other alternative currencies.

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