The SEC yesterday rejected the SolidX ETF proposal, citing concerns relating to the possibility of market manipulation and difficulty in the regulation of the peer-to-peer network in overseas markets. It had earlier rejected the Winklevoss proposal for a Bitcoin ETF earlier this month
So what happens now?
While the decision on the third ETF proposal from Grayscale Partners is still pending, given the SEC’s concerns around regulations, it seems that ETF approval isn’t coming anytime soon. But despite the rejections, the currency continues to remain resilient. It recovered quickly, after a sharp fall of ~20% following the first rejection. And with the second rejection, the drop of ~1% has not been too dramatic. No doubt, the ETF approval would have helped the currency with capital flows from a diversified investor base and granted it legitimacy, but the rejections do not spell doom for the currency either.
It’s finite supply will continue to lend support to it’s price. Further, ongoing geopolitical risks, emerging market currency devaluations, Bitcoin’s uncorrelated price movements with the capital markets – all these factors will continue to lend support to adoption of Bitcoin as a forex hedge, portfolio diversification instrument and an alternate safe haven.