Bitcoin and ethereum, the two biggest cryptocurrencies by market value, suddenly soared yesterday despite the U.S. Securities and Exchange Commission (SEC) rejecting the latest attempt at creating a bitcoin exchange-traded fund (ETF).
The bitcoin price is up some 5% over the last 24-hour trading period, while ethereum has risen almost 6%, both adding to gains earlier in the week.
“The news that the SEC is not going to approve a bitcoin ETF has not impacted the market with bitcoin heading higher again,” Marcus Swanepoel, chief executive of London-based bitcoin and cryptocurrency exchange Luno, wrote in a note this morning.
“Overall, global markets are also up and we are seeing some positive sentiment.”
Bitcoin’s bounce was attributed to the U.S. Federal Reserve’s plans to pump cash into the financial market to boost bank balance sheets and drive inflation.
“We know that [Fed easing] has historically helped bitcoin,” Joe DiPasquale, chief executive of the bitcoin and cryptocurrency investment firm BitBull Capital, told bitcoin industry news site Coindesk.
The SEC yesterday ruled the Bitwise Asset Management ETF proposal, filed with the NYSE Arca stock exchange, did not meet legal requirements to prevent market manipulation or other illicit activities.
“Because, among other things, [Bitwise and NYSE Arca] has asserted that 95% of the bitcoin spot market consists of fake and non-economic activity, but has not established that it has, in fact, identified the ‘real’ bitcoin market, or that the ‘real’ bitcoin market is isolated from the fraudulent and manipulative activity, we find, in each case, that NYSE Arca has not met its burden to demonstrate that its proposal is consistent with the requirements … and therefore the Commission disapproves this proposed rule change,” the SEC said.
The SEC has so far rejected all bitcoin ETF proposals due to concerns around fraud and market manipulation, with the regulator knocking back the closely-watched VanEck bitcoin ETF application last month.
Bitcoin speculators have long hoped a U.S. bitcoin ETF will mean traders and investors are more easily able to buy into volatile crypto markets without having to navigate clunky bitcoin exchanges.
Bitcoin and other major cryptocurrencies were sent sharply lower last month after the hotly-anticipated Bakkt bitcoin and cryptocurrency trading platform went live with underwhelming volumes.