The price of bitcoin dropped by some $70 on Tuesday (March 7) for no readily apparent reason, leaving investors naturally a bit confused at best, or panicked at worst.
Bitcoin had spent the past week climbing toward new record highs on optimism that the SEC could soon approve a bitcoin-based exchange-traded fund. Yet trading on Tuesday morning saw a sharp drop in the value of everyone’s favorite digital currency, from around $1,280 on Monday evening down to just over $1,207 by mid-morning Tuesday.
As of Tuesday afternoon, bitcoin appears to have begun the process of recovering from the slip. At the time of writing, bitcoin was worth $1,248.63. But in the few hours that the price of bitcoin was down, some speculated that it could mean the SEC had denied approval for a bitcoin ETF.
More likely than not, the sudden drop was just a symptom of the digital currency’s characteristic volatility. Since the SEC decision deadline is fast approaching, however, some investors, who are surely eyeing every fluctuation in bitcoin’s value, inherently (though a bit hastily) had assumed the worst.
Despite what the graphs might imply, the SEC has yet to make a formal announcement on their decision regarding the Winklevoss twins’ proposed bitcoin ETF. The organization has until March 11.
The Winklevoss twins’ proposed Bitcoin Trust is one of three potential ETFs that could track the value of bitcoin. If approved, some $300 million could potentially flood the bitcoin ETF during its first week. How bitcoin will fare long term, if introduced to the market, still remains anyone’s guess.
Some are worried, for instance, about security risks surrounding a bitcoin-based ETF, given the cryptocurrency’s rocky history. In February 2014, Mt. Gox shuttered its business after a mysterious “glitch” caused some $500 million worth of bitcoin to go missing. Most of those bitcoins have never been recovered.