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The U.S. Government Shutdown Has Delivered A Surprise Blow To Bitcoin

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  • The U.S. Government Shutdown Has Delivered A Surprise Blow To Bitcoin

    Bitcoin has been struggling over the last 12 months due to sky-high expectations after its massive 2017 bull run that saw the bitcoin price leap from under $1,000 at the start of the year to almost $20,000.

    The bitcoin price has fallen steadily over the last 12 months, slipping to lows of near $3,000 as bitcoin and cryptocurrency investors fret over delays to network upgrades, lackluster institutional investment, and heavy-handed regulators.

    Now, in a surprising development, the on-going U.S. government shutdown has forced the withdrawal of a closely-watched proposal to list a bitcoin exchange-traded fund (ETF) on the Cboe BZX Exchange—dealing a blow to those who'd hoped the long-awaited bitcoin ETF would bring a fresh round of investment into the stagnating market.

    The bitcoin and cryptocurrency market has lacked direction over the last few months, moving steadily lower as investors feel for a floor.GETTY

    The bitcoin ETF proposal, brought by investment firm VanEck and financial services provider SolidX, has faced an uphill battle for approval from the U.S. Securities and Exchange Commission (SEC) due to concerns the bitcoin price is susceptible to market manipulation.

    The decision to withdraw the application amid the U.S. government shutdown, announced in an SEC filing, saw the bitcoin price dip slightly though it remains around the $3,500 it's been trading at since early January.

    With many SEC staff furloughed because of the partial closure of the U.S. federal government and the regulator's deadline to decide on the application fast approaching, Cboe Global Markets decided to pull the VanEck and SolidX application with the view to reapply at a later date.

    "The SEC is affected by the shutdown… we were engaged in discussions with the SEC about the bitcoin-related issues, custody, market manipulation, prices, and that had to stop. And so, instead of trying to slip through or something, we just had the application pulled and we will re-file and re-engage in the discussions when the SEC gets going again," Jan van Eck, the chief executive of VanEck, told CNBC.

    bitcoin, bitcoin price, bitcoin etf, US government shutdown, chart
    The bitcoin price has been on a steady downward trend for the last 12 months.COINDESK

    The SEC had set a deadline of February 27 to decide on the bitcoin ETF proposal after repeated delays and calls for industry input.

    "Cboe’s decision to withdraw its filing with the SEC to list and trade shares of the VanEck SolidX Bitcoin Trust is a function of timing related to the U.S. government shutdown as the end of the review period approaches," Cboe said in a statement. "We plan to resubmit a filing at a later date and look forward to continued discussions with the SEC."

    The latest development in the long-running battle to see a U.S. bitcoin ETF follows the SEC rejecting a second attempt by the Winklevoss twins of Facebook founding fame, who went on to start their own crypto exchange, to list shares of a separate bitcoin ETF last summer.

    With a U.S. bitcoin ETF now off the immediate agenda, investors will be looking towards major global stock exchanges offering bitcoin futures contracts and the highly-anticipated Bakkt bitcoin platform.

  • #2
    surprising that the price didn't move at all from this withdraw. that's the one thing that has me thinking there is a small chance this is the bottom. during the summer this news would have dropped bitcoin 10%.

    having said that i will not be at all surprised to see a 1k bitcoin in the next 6 months.


    • #3
      Bitcoin Price Hits Record Sixth Consecutive Month of Losses

      *Bitcoin registered losses for a record sixth straight month in January, reinforcing the bearish view put forward by the moving average studies on the monthly chart. As a result, a re-test of December lows near $3,100 could be on the cards.

      *The odds of a sustained rise to $4,000 would improve if the 200-week moving average at $3,298 serves as strong support and ends up pushing prices above $3,658 (high of last Saturday’s gravestone doji candle).