This is a speculative article. Before we begin, this is not to accuse the US Securities and Exchange Commission (SEC) of manipulating the Bitcoin price, this is simply to highlight that through Bitcoin’s decrease in decentralisation, the SEC could use the looming ETF decision to their advantage, and it’s quite startling to think about.
The SEC have recently announced an extension to their deadline for a decision regarding a Bitcoin Exchange Traded Fund (ETF) application. A decision was to be made by this Friday however, as a part of the proceedings the SEC allowed themselves to extend their deadline. They have recently announced that this is now the case, pushing the deadline back to the 30th of September 2018. This has caused the value of all major cryptocurrencies to crash, in the same way the markets crashed when the SEC rejected the recent ETF application by the Winklevoss Twins and their Gemini exchange.
Since the SEC news, Bitcoin has dropped 8%, Ethereum has dropped 10%, XRP has dropped 15%, Bitcoin Cash has dropped 13% and EOS has dropped 15%. The impact is currently being felt market wide. Whilst this decline isn’t going to last forever, it’s an indication that this SEC decision has a lot of power with regards to the markets.
We see it this way – if the markets have reacted this heavily to a delay in the decision, what sort of collapse will we see if the SEC reject this ETF application? Moreover, how will the markets react if the application is approved, we can only see the value of the markets fly.
This is what we need to understand
Surely, the SEC can see how much power they have here. Now, imagine this:
Leading up to the 30th of September and the final deadline for this decision, Bitcoin will become very volatile. If the SEC allow rumours to generate, that suggest the ETF will be rejected, or the decision will see another delay, the price of Bitcoin and the rest of the markets will fall, creating a perfect buy in scenario, with Bitcoin at a low price.
Then, the SEC have the power to change the markets again, by accepting the application and by making an announcement that will cause Bitcoin to fly, allowing them to sell off and run away with a nice profit.
Now of course, this would never happen on an official SEC level, but is there anything to stop the decision makers going on to do this in their own time? It’s frowned upon, but would they even get caught?
We need to be very careful with our investments leading up to this decision. The value of our assets will become very sensitive to time and the SEC will have an awful lot of power leading up to this date.
It’s likely they won’t abuse this power, but on the other hand, would it be a surprise if they did?