Hello Steemians! On the 22nd Jan 2019, CBOE withdrew the proposed rule changes to the SEC, that would allow it to list a Bitcoin exchange-traded fund (ETF). The ETF was backed VanEck and SolidX. The proposal was first filed with the SEC back in June 2018, and the final deadline for SEC to approve or reject was set for Feb. 27. While the proposal was withdrew on the 22nd Jan, news only started to spread on 23rd and 24th.
Contrary to popular belief, the Bitcoin price did not move much despite the proposal withdrawal. If you take a look at the chart below, we are essentially trading side-ways after the announcement. Sometimes, market reacts to news in a delayed manner. Hence, I deliberately waited for a few more days to confirm the impact of the news. So after more than 3 days of side-way trading, I think the coast is more or less cleared.
Why was the proposal withdrawn?
The official reason given by VanEck CEO, Jan van Eck was as such,
“The shutdown affected the U.S SEC, we were engaged in discussions with the SEC regarding Bitcoin-related issues, market manipulation, prices, custody, and that had to stop. So, rather than trying to sleep through or something, we just had to withdraw the application and we will re-file and reengage in the discussions when the SEC gets going again.”
Source
The interview between Jan van Eck and CNBC can be found below:
But I think that is a cover story. In one of my earlier posts, I mentioned that it is going to take much longer time for institutional investors to rush in. These large institutions often have corporate governance in place. There are many checkboxes that need to be ticked before a small investments can be made.
Same goes for the SEC. There are many considerations they have to sort out before allowing an ETF to be approved. The very fact that Bitcoin can still be so easily manipulated is likely to result in the ETF proposal to be rejected by the SEC in February anyway. Hence, instead of taking a setback when it gets officially rejected, why not withdraw it first and wait for a better timing to submit the proposal again? The US government shutdown provides the golden opportunity for an excuse to withdraw the proposal. I will consider my hypothesis proven right if CBOE/VanEck does not submit the proposal within 3 months after SEC is open for business again.
I guess that Bitcoin price will need to be at least $10k for the ETF to be approved. That will only happen after Bakkt is up and running and confidence is restored after full market capitulation. In the same article, I mentioned my belief that the market will fully capitulate this year with the BTC price crashing further to low-mid $2k. When the bottom is hit, it is going to be followed by a quick bounce as many long-term investors will find that price too good to resist. Institutional investors will only come in after the market has fully capitulated.
Why didn't the market react to the news?
I think we are in the bear market for too long and have gone past the stage where market will react to bad news violently. If we were still at the $6k BTC price range, I think this would have triggered the fall to the current level. But since we are already at this $3.5k level, the market is kind of immune. There is this interesting video from "Sunny Decree" on how he feels that this is a failed market manipulation attempt. I think it is an interesting perspective and the video (linked below) is worth a watch. On the side note, "Sunny Decree" used to be quite active on Steem under the name of 
All these being said, I think we are not out of the woods yet. The market is a little too quiet at this stage for my comfort and a huge move might be coming real soon. Of course I hope that it is going to be to the upside, but I am also mentally prepared for it to be to the downside. I was actually hoping this ETF news is going to lead to a sell-off and officially lead to market capitulation. That did not turn out to be the case just yet. Let's see what will happen next.
Thanks for reading! What are your thoughts on the ETF proposal withdrawal? And where do you think the market will move next?