Bitcoin, the world’s best performing digital currency in 2016, has had a difficult start to 2017 in some quarters.
Increasing oversight and regulation in some key markets has caused some concern over the future direction of the market — not least in the U.S., where the Securities and Exchange Commission is expected to rule on the legitimacy of three bitcoin ETFs, or exchange traded funds.
The upcoming ruling has been held responsible for particular volatility in bitcoin pricing this week, as investors try to get a read on the SEC’s position.
With the deadline for a decision looming by Saturday, some investors have sold bitcoin ahead of the potential for further volatility when their decision is announced.
Now, according to insiders in the SEC, a decision is expected to be delivered ahead of Friday this week, with potentially significant implications on the short-term price of bitcoin.
If one or more of the funds are approved, analysts are predicting the price of bitcoin to rise still further, as a sign of more mainstream acceptance into the financial world for this new, emerging currency.
On the other hand, if the funds are declined, it could spell turbulence on the bitcoin market, less than 24 hours after it temporarily lost some five percent of its value.
Some insiders feel the SEC is unlikely to publicly reject bitcoin funds, instead preferring to encourage the application to be withdrawn in the event that it cannot be accepted.
But with the deadline rapidly approaching, there has been no indication of any such move. While some will tentatively see this as good news, others, such as former New York Stock Exchange boss Phil Bak, suggested there could be bitcoin-specific factors at play.
“In this case, the government agency may want to show the world it is unsure about bitcoin. Alternatively, it could also be that the advocates want to support it to the end and let this proposed fund get its day in court, rejection or not.”
Ahead of the announcement, uncertainty is expected to prevail, making for volatile trading conditions for those buying and selling bitcoin.
While some analysts suggest the SEC will support ETFs, which can help establish a more transparent pricing model for the currency, others have put the decision as a 50-50.
With the deadline for a decision fast approaching, it remains to be seen whether bitcoin can overcome this latest regulatory hurdle, and finally gain the acceptance of the SEC as a viable instrument for exchange trading.