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Crypto market wrap: Bitcoin drops into danger zone


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Bitcoin symbol and chart
Bitcoin fell to the $19,000 level on Thursday, bringing altcoin prices down with it. - Photo: Getty Images

Bitcoin dipped into its danger zone Thursday, bringing altcoin prices down with it.

The world’s most valuable cryptocurrency fellow to the $19,000 level – and stayed there. That was different than other times recently when bitcoin (BTC) fell below $20,000 temporarily before rising. The $19,000-$20,000 range is considered a potential pivot point to a much deeper decline.

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BTC to USD

Stories drag on market

According to a leading analyst, macroeconomic and crypto market factors are to blame.

“Bitcoin falling back to $19,000 [Thursday] reflects the [cryptocurrency sector’s] strong recent correlation to equities markets and can also be tied to some of the problems going on with crypto lenders,” Weiss Ratings analyst Alex Benfield told Capital.com.

Benfield was referring to Voyager Digital issuing a default notice on $675m (Xm) to crypto hedge fund Three Arrows, which is now entering liquidation, according to reports,

Celsius Network freezing withdrawals and transfers for its 1.7 million clients and some other crypto companies doing likewise and laying off staff.

“These stories have been a drag on the market and have hurt investor confidence,” added Benfield. “BTC is likely still searching for a local bottom and could possibly hit new lows in the days to come.”

BITO to USD

Grayscale sues SEC

Bitcoin’s price pressures appeared to be exacerbated Thursday as the US Securities and Exchange Commission (SEC) denied Grayscale’s request to convert its Grayscale Bitcoin Trust Fund (GBTC) into an exchange-traded fund (ETF). Grayscale responded by filing a lawsuit against the SEC.

The legal action, filed with the US Court of Appeals in the district covering Washington, DC, challenges the decision.

Photo of ManAlex Benfield, Weiss Ratings analyst (Photo: Courtesy of Alex Benfield)

Benfield said the ruling is “not too much of a surprise, as the SEC has seemingly had a bone to pick with crypto for quite some time.”

“Many ’40 Act funds are waiting on a long bitcoin ETF to gain exposure to this market,” he added, referring to pool investment vehicles that are covered under the 1940 Investment Companies Act and known as the ’40 Act funds.

“But the SEC has not allowed such a product,” continued Benfield. “In fact the SEC actually just approved a short bitcoin ETF which is now already the second-largest bitcoin ETF product. In my opinion, that shows a bias on behalf of the SEC.”

AR to USD

New short bitcoin ETF grows rapidly

The ProShares Short Bitcoin Strategy ETF (BITO), to which Benfield was referring, has expanded quickly since launching on 21 June. As the name suggests, that fund is geared towards short-term investments in bitcoin.

Gensler angers industry

SEC chief Gary Gensler, a former professor who has taught cryptocurrency-related courses, has angered the industry by taking a hawkish stance on digital assets.

“All this effectively just further delays more institutional money from gaining exposure to bitcoin,” said Benfield. “But that day will eventually come, perhaps under a new SEC commissioner one day.”

Celsius coin biggest loser

Meanwhile, the Celsius Network coin (CEL) was the biggest altcoin loser on Thursday. CEL was down about 17% as conventional markets closed in North America, according to CoinMarketCap data.

The plunge, which followed an 8% rise on Thursday, coincided with a Block report that FTX walked away from a potential deal to support Celsius financially or acquire the company. According to the Block, Celsius CEO Sam Bankman-Fried soured on a possible agreement after a “$2bn hole” was found in the network’s balance sheet.

 

Arweave rare gainer

Arweave, a relative unknown but still a top 100 coin, was one of the few altcoin gainers. But it fell into the red shortly after conventional markets closed. Tether, a stablecoin pegged to the US dollar, was up marginally.

“Altcoins will likely show some major weakness if bitcoin and Ethereum hit new lows, although I have seen examples of altcoins decoupling and rallying on news based on project developments,” said Benfield. “This tends to happen before major [price] capitulation and is another sign that the bottom might not be in yet.”
 

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