Bulls Put On The ‘Spot’ As VanEck Bitcoin ETF Is Rejected

Bitcoin ETF season has come to an abrupt halt as the spot-based ETF proposal by VanEck has been rejected by the Securities and Exchange Commission. Here is a closer look into why the SEC rejected the proposal, what this means for future approvals, and what it could mean for the cryptocurrency’s continued bull run.

The SEC Denies VanEck Spot Bitcoin ETF Proposal

The United States Securities and Exchange Commission announced Friday that it had rejected a proposal for the VanEck Bitcoin ETF. The application was filed in March by the CBOE BZX Exchange, but the SEC claims that CBOE has failed to demonstrate it could protect investors from fraudulent trading.

Related Reading | Apple CEO Tim Cook Holds Bitcoin And Ethereum As Part Of Diversified Portfolio

The VanEck Bitcoin ETF proposal would have tracked the spot price of Bitcoin directly. Other, similar proposals are up for approval or denial in the coming weeks and this latest development puts them in jeopardy.

Bitcoin price fell sharply around 3% on the news, but has recovered since.

 Support broke down after the VanEck news circulated around. | Source: BTCUSD on TradingView.com

Caution And Doubt Dominates Cryptocurrency Continuation Optimism

Rewind to just a couple weeks earlier, and the leading cryptocurrency by market cap was the talk of finance. The first ever Bitcoin-based ETF was approved last month, which tracks the price of CME BTC Futures.

Related Reading | Time For Plan C? S2F Followers Expect $288K Bitcoin Price In Two Months

The spot price of Bitcoin followed, setting a new all-time high. Momentum thus far has failed to sustain, and volume remains weak. Making matters worse, there has been abundance of leverage from derivatives traders in the market because of expectations of significant price appreciation.

Long positions plummeted after the news made waves. | Source: BTCUSD on TradingView.com

However, as the chart above shows, the negative news regarding the ETF rejection has prompted a large portion of long positions to begin closing. Allowing the market to cool off and reset leverage, without a drastic selloff, could be healthy for Bitcoin price action.

BTC-related ETFs are up for approval for the remainder of the year and into the new year, meaning there is ample room for several more approvals and denials to keep volatility coming. Bulls will need to defend the spot price of Bitcoin at around $62,000 where weekly support lies. Losing the level could result a return to the $50,000 range, while pushing beyond $68,000 could result in highs closer to what the Stock-To-Flow model predicts.

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Featured image from iStockPhoto, Charts from TradingView.com