The bitcoin price, which has had an incredible start to the year, had been hovering around $10,000 per bitcoin before moving sharply lower—diving just as global markets went into free fall due to the spreading coronavirus.
However, many thought bitcoin had begun acting as a so-called safe haven asset, rising as equity and riskier assets fell, and a ruling by the U.S. Securities and Exchange Commission (SEC) against a long-hoped for bitcoin exchange-traded fund (ETF) might somewhat explain the sudden sell-off.
On Wednesday, the SEC rejected an ETF application from New York-based asset management firm Wilshire Phoenix and options exchange NYSE Arca that wanted to mix bitcoin and short-term Treasuries.
“The Commission concludes that NYSE Arca has not established that the relevant bitcoin market possesses a resistance to manipulation that is unique beyond that of traditional security or commodity markets such that it is inherently resistant to manipulation,” the SEC said in a statement.
Bitcoin dropped some 6% on Wednesday, taking the bitcoin price below the psychological $9,000 per bitcoin mark and exacerbating a slump in the price.
Bitcoin has now found a temporary floor of around $8,500 after its slide lower this past week.
The SEC has rejected many applications for a bitcoin ETF over recent years, meaning this latest ruling didn’t come as a surprise.
“I didn’t see any viable reason why this would be accepted when others were denied,” Bloomberg Intelligence analyst James Seyffart said.
However, comments accompanying the ruling have suggested the SEC…