On the evening of August 17, bitcoin went into decline. At the moment, the BTC rate fell by 10%. The minimum value of bitcoin for 24 hours, according to CoinMarketCap, was $25,409. As of the time of writing the review, the coin has corrected to $26,427.
Amid bitcoin’s fall, all coins from the top 10 of the capitalization ranking, with the exception of stablecoins, showed negative dynamics.
Why bitcoin fell: 3 reasons
Bitcoin fell, dragging the entire digital asset market behind it, against the backdrop of an extremely negative news background. Here are the main events that may have put pressure on BTC.
1- SEC’s fight with Ripple continues
The court approved the interlocutory appeal of the U.S. Securities and Exchange Commission (SEC) in the case against Ripple, proceedings on which have been ongoing since December 2020. Recall that on July 13, 2023, the judge concluded that retail sales of the project’s cryptocurrency, XRP, did not violate the Securities Act. At the same time, the court saw violations in the sales of the coin to institutional investors. SEC did not agree with the decision of the judge. Representatives of the Commission intend to prove the guilt of Ripple.
What’s wrong with that: the media write that the approval of the SEC’s interim appeal by the court may lead to a review of the case and a victory for the regulator. If the Commission succeeds in proving that XRP is an illegally issued security, the fate of other cryptocurrencies whose issuers are facing similar charges will be in jeopardy.
2- Elon Musk is selling off bitcoins
Ilon Musk’s company SpaceX has sold $373 million worth of bitcoins, according to a report highlighted by The Wall Street Journal.
What’s wrong with that: Ilon Musk is one of the most colorful crypto-activists. In 2021, Piplsay analysts found that 37% of American investors made investment decisions based on his tweets at least once. Therefore, market participants are closely following Musk’s actions and the decisions of the management of the companies under his control regarding cryptocurrencies.
The businessman is a fan of the Dogecoin (Doge) cryptocurrency. Also Ilon Musk invests in bitcoin and Ethereum. The businessman explains his interest in cryptocurrency by the fact that digital assets help him fight inflation.
In February 2021, it became known about the investment of Musk-controlled electric car manufacturer Tesla $1.5 billion in bitcoin. A month later, the company began selling cars for BTC.
In April 2021, Tesla reported selling 10% of bitcoins. Following – in May, the company suspended the sale of cars for BTC. In July 2022, Tesla sold another 75% of its bitcoins. It is noteworthy that despite the impressive sales volumes, the electric car manufacturer retained its place in the top 3 largest public companies – BTC investors.
Here’s how bitcoin reacted to Tesla’s actions:
Orange line – news release about Tesla’s $1.5 billion investment in bitcoin.
Blue line – launch of Tesla auto sales for bitcoin.
Green line – news release about Tesla selling 10% in bitcoins.
Blue line – suspension of Tesla sales for bitcoins.
Yellow line – Tesla selling 75% of bitcoins.
Bitcoin’s behavior against the backdrop of Tesla’s actions. Source: TradingView
The chart shows that bitcoin is reacting negatively to the news about Tesla’s bitcoin sale and the company’s refusal to accept payment in cryptocurrency. It can be assumed that the news about the sale of BTC by SpaceX could also provoke the fall of the crypto market.
3- Investors lose hope for the launch of a spot bitcoin-ETF in the US
The positivity around the news about the possible launch of a spot bitcoin-ETF in the U.S. has waned. Recall that the race to launch the instrument in June 2023 was resumed by investment giant BlackRock. Following him, many other companies sent applications to the SEC for approval of a spot bitcoin-ETF.
Despite the optimism of cryptocommunity participants, the Commission, as in the case of past attempts by market participants to launch the instrument, began to stretch the deadlines for issuing a decision on the applications. Recall, earlier the editorial staff of BeInCrypto talked to experts about the likelihood of approval of a spot bitcoin-ETF in the United States during 2023.
What’s bad about it: participants in the crypto community believe that the approval of a spot bitcoin-ETF will trigger an influx of investors into the digital asset market. The lack of confidence in the approval of the instrument amid the SEC’s dragging out the timing of the decision reduces interest in the cryptocurrency.
“The cherry on the cake” was the hawkish policy of the U.S. Federal Reserve, which puts pressure on the stock market. The movements of the latter, in many respects, repeat the crypto market. Translated with www.DeepL.com/Translator (free version)