Bitcoin And The SEC ETF Rejection

bitcoin-495995_960_720So the US SEC did not issue a license for the Winklevoss Bitcoin ETF proposal.

As I said in my last post, I suspected the SEC would most likely reject the Winklevoss application, so I wasn’t that surprised.

I’d been watching news feeds to catch the SEC’s announcement,  but it was frustrating since there’s such a flood of other news.

Finally decided to switch them off and just keep a price chart USD/Bitcoin running. That would tell me what was going on.

Then suddenly the price movements began. Downwards. So the SEC had obviously decided No.

Bitcoin fell over 100 USD in less than a minute before my eyes, fascinating to watch. I was out of the market since the previous week so this was good from my perspective.

Last time I saw anything like this was back in April 2013 when Bitcoin really crashed. This was a minor blip by comparison. A sharp one, but still minor.

At the same time the markets for the other digital currencies suddenly started going mad, up 10%, 20% and more in a few minutes. This continued throughout the evening.

The Altcoins had been trading in largely minus figures all day. Altcoins tend to move roughly in the contrary direction to Bitcoin, so there is a hedging effect there which you can utilize.

I think I did quite well in moving 80% out of Bitcoin last week. But I could have been quicker in buying back in when the initial price fall occurred, then I could have scraped up a couple of good bargains. I had set buy stop losses earlier for the way down, but I then cancelled most of them at the last moment as I felt they were being over-presumptuous about how much the market might fall.

My instinct is more to hold off and wait and see if it’s reached the bottom yet or not. Trouble is of course no one knows for sure where the bottom is until after the event. But I made a couple of trades as it settled and started to move up again. Better also to set buy stop losses on the way up.

This weekend immediately after the SEC announcement Bitcoin trading has been flat, so I don’t know yet which direction Bitcoin will next go in the short-term. Weekends especially in Europe are always quieter on the Forex markets, so I feel we won’t know for sure until next week.

Actually the price crash for Bitcoin was small, only about 12% or so, and it’s already slowly recovered quite a bit. That would be a big fall for traditional Forex or stocks, but it’s more a minor affair for Bitcoin which sees much greater volatility as a rule.

Take a look at the BTC/USD chart:

BitcoinFridaySECCrashAndRecoveryChart

So where will Bitcoin go from here?

At the moment we are static around $1100. Flat as a duck pond. But this will change.

I get the impression everyone is watching and waiting, no one wants to be the first to make any big moves one way or the other.

We may get a further shake out and lose another $50-100 over the coming week, but I tend to think most of the movements have already been priced in by the smart money and more savvy traders through the falls in the run-up days before the SEC decision was announced.

On balance, I think the way is set after a week or so for the resumption of further strong moves upwards.

And all in all, the SEC decision makes little difference to Bitcoin.

So keep your eyes on the short-term Bitcoin price developments for the coming few weeks and get ready to buy.

By the way, if you want to read the actual SEC ruling, here it is (not exactly bed-time reading): https://www.sec.gov/rules/sro/batsbzx/2017/34-80206.pdf

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Disclosure: The author holds investments in Bitcoin and other financial assets at the time of writing this article.

Disclaimer: Readers are responsible for their own investments and trading decisions. Bitcoin and other digital currencies are high risk investments. Always remember prices can go down as well as up.

 

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