Bitcoin’s Drop Below $30K Triggers Over $100 Million in Liquidations as SEC Deems Spot ETF Filings Inadequate

By 0xK2 06/30/23 3:00 PM

In a startling turn of events, the cryptocurrency market witnessed over $100 million worth of liquidations within just one hour. The catalyst behind this significant selloff was the revelation that spot exchange-traded funds (ETFs) filings were deemed inadequate, as reported by the reputable Wall Street Journal. The fallout was immediate, with major players in the crypto industry experiencing substantial losses.

Leading cryptocurrency data platform, Coinglass, reported liquidations totaling $87 million within the past hour, while the overall figure surpassed the $100 million mark over the course of the last four hours. The alarming downturn coincided with Bitcoin’s drop below the critical $30,000 threshold, further exacerbating the sense of panic among investors and traders.

As AZCoin News recently reported, the Securities and Exchange Commission (SEC) raised concerns regarding the recent filings for spot Bitcoin ETFs. Prominent asset managers such as BlackRock and Fidelity had submitted these filings, seeking approval for Bitcoin-focused exchange-traded funds. However, the SEC has now deemed these filings inadequate, citing a lack of clarity and comprehensiveness.

In a move that caught many by surprise, the SEC informed the exchanges that the filings had been returned. The regulatory body highlighted two key issues with the submissions. Firstly, the filings failed to identify the specific spot Bitcoin exchange with which the ETFs were expected to establish a “surveillance-sharing agreement.” Secondly, the provided information regarding the details of these surveillance arrangements was deemed insufficient by the SEC.

The requirement for a “surveillance-sharing agreement” serves as a critical element in the SEC’s evaluation process. Such agreements enable regulatory bodies to monitor and mitigate potential market manipulation, which is particularly crucial in the cryptocurrency space. The lack of transparency surrounding these agreements raised concerns among the SEC, leading to the rejection of the filings.

The fallout from this setback was swift and severe. Investors reacted to the news with a wave of liquidations, seeking to minimize their exposure to the uncertain market conditions. Coinglass, a prominent cryptocurrency exchange, reported the liquidation of $87 million worth of assets within a single hour, highlighting the immediate impact of the SEC’s decision. The total liquidation figure exceeded $100 million within just four hours, reflecting the extent of the market’s unease.

The repercussions of this development are not limited to the immediate market response. The rejection of these filings will undoubtedly delay the launch of Bitcoin ETFs, which many in the crypto industry believed would be a significant step towards mainstream adoption and institutional involvement. With regulatory concerns lingering, asset managers will need to revisit and refine their submissions to meet the SEC’s requirements, prolonging the process of bringing Bitcoin ETFs to market.

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