Why CBOE's Withdrawal of the Bitcoin (BTC) ETF Did Not Shock the Crypto Markets as Expected 10

Why CBOE’s Withdrawal of the Bitcoin (BTC) ETF Did Not Shock the Crypto Markets as Expected

When news hit the crypto-verse that the CBOE exchange had withdrawn its application for a rule change at the SEC to consider a Bitcoin ETF, many traders had held their breath expecting the value of BTC to fall a few hundred points and even possibly retest $3,200. The news only resulted in BTC dropping from $3,600 to around $3,567: a decline of 0.91%. The King of Crypto is currently trading at $3,600 indicating that the news had little effect on BTC.

Looking at the total market capitalization, we find that it fell from $120.6 Billion to $119.1 Billion due to the news. This is a drop of 1.24%. The total market capitalization is currently back to $120.346 Billion indicating that the news did not do much damage.

Why There was Not Massive ‘Dump’

A lot of theories have been floated around in the various social media platforms. Four explanations that were dominant were as follows:

  • Traders had factored in the possibility of bad news from the SEC given the US Government shutdown
  • The CBOE Bitcoin ETF no longer holds much relevance to ‘die hard’ crypto traders and investors
  • The expiry of the CME Bitcoin Futures tomorrow, had already stagnated the crypto markets enough
  • Individual traders had become somewhat immune to bad news from ‘Wall Street’ as they endure a year long bear market

Further elaborating on the four possible reasons why the news of CBOE’s withdrawal of the Bitcoin ETF had little market effect, we find in the first scenario the currently ongoing government shutdown has affected the functions of many federal agencies such as the SEC and CFTC. In the case of the latter, the CFTC has the sole authority to determine the future of Bakkt. Crypto investors and traders had perhaps connected the dots and concluded there would be bad news with regards to the Bitcoin ETF due to the ongoing Shutdown. This then explains why there was no panic selling.

The second scenario points to the indifference many crypto trader and investors currently have towards the approval or rejection of an ETF application. This is hinged on the fact that 2018 was marked by the crypto markets been shaken by several ETF rejections. With time, traders have developed an immunity for bad news from the SEC. There is also the added fact that many crypto idealists believe that Satoshi Nakamoto did not intend for Wall Street to get involved in the functions of Bitcoin.

Thirdly, another batch of CME Bitcoin futures expire tomorrow, January 25th. The current value of BTC and other cryptocurrencies had already factored in this event thus the CBOE withdrawal did not impact the markets as anticipated. Perhaps if the news arrived earlier on in the month, there might have been serious panic selling.

The fourth theory that has been postulated is an extension of the second: crypto traders and investors have dealt with the current bear market for over a year and have developed an immunity to bad news. The ones still trading or hodling have weathered the storm and have become immune to any external negative news.

What are your thoughts on the crypto markets not falling as expected when news broke that CBOE had withdrawn their Bitcoin ETF application at the SEC? Has the ETF lost all relevance to crypto traders and investors? Please let us know in the comment section below.

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Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.