Bitwise, one of several asset managers seeking to introduce Bitcoin spot exchange-traded funds (ETFs) in the U.S. market, has taken an unexpected step by withdrawing its application for the Bitcoin and Ethereum Market Cap Strategy Ethereum Futures Contracts (ETF). This application was initially submitted to the Securities and Exchange Commission (SEC) on August 3.

The sudden withdrawal of the Bitcoin and Ethereum Market Cap Strategy ETF application has raised eyebrows. While Grayscale’s recent SEC victory had boosted market confidence, Bitwise appears to be quietly reconsidering its approach. The withdrawal statement mentioned that the fund aimed to provide investors with capital appreciation, but it also noted that there were no guarantees of achieving this objective.

“The Trust no longer intends to seek effectiveness of the Fund and no securities of the Fund were sold, or will be sold, pursuant to the above-mentioned Post-Effective Amendment to the Trust’s Registration Statement.”

In its withdrawal statement, Bitwise provided limited details, stating, “The Trust no longer intends to seek effectiveness of the Fund and no securities of the Fund were sold, or will be sold, pursuant to the above-mentioned Post-Effective Amendment to the Trust’s Registration Statement.”

SEC’s Ongoing Delays

The SEC has been delaying its decision on various Bitcoin exchange-traded fund applications from multiple firms, including WisdomTree, Invesco Galaxy, Valkyrie, VanEck, BlackRock, Bitwise, and Fidelity. The commission has extended the review period for spot Bitcoin ETF applications from WisdomTree, VanEck, Invesco Galaxy, Bitwise, and Valkyrie, as well as Fidelity’s Wise Origin Bitcoin Trust and BlackRock’s Bitcoin ETF. The next set of deadlines for the SEC falls in mid-October, but these dates could be further postponed to the SEC’s third batch of deadlines in January, or the final decision dates in March, April, or May of the following year.

Bitwise, known for being among the early asset management firms to apply for Bitcoin ETF products, had proposed a BTC-backed ETF in January 2019. The ETF aimed to track the Bitwise Bitcoin Total Return Index, which derived its value from BTC transactions on various exchanges.

Moreover, Bitwise had planned to gather market data from multiple cryptocurrency exchanges to provide a reliable representation of the broader cryptocurrency market. The company had also intended to employ third-party custodians for the physical custody of Bitcoin.

Debates have emerged regarding whether the current state of cryptocurrencies, including Bitcoin, constitutes the “longest ever bear market,” prompting experts to explore varying perspectives on this matter.

Understanding the Definitions

The assessment of a bear market can differ based on how it’s defined. Some argue that the term depends on historical price movement or anticipated future direction, causing endless debates with no clear resolution.

Examining Historical Periods

A historical perspective reveals instances when Bitcoin remained below its previous highs for extended durations. For instance, Bitcoin struggled to surpass $1,000 between November 2013 and January 2017, a span of over three years. Similarly, after hitting $20,000 in December 2017, Bitcoin didn’t reach that level again until December 2020, nearly three years later.

Reassessing the Criteria

Traditional bear market definitions often involve a decline of 20% or more from recent highs. Current data indicates that Bitcoin’s most recent peak occurred in mid-2023 at around $31,400. With the cryptocurrency down roughly 13% from that level, some suggest that it might not be accurate to label the current situation as a bear market.

Bitcoin price chart between late 2017 August 2023. Source: CoinGecko

Experts point out that taking a broader perspective reveals a continuous upward trajectory for Bitcoin. Amid factors like high inflation, increasing adoption by nation-states like El Salvador, and growing concerns about debt and purchasing power loss, many argue that Bitcoin remains in a bullish trend.

A Matter of Timeframes

The varying opinions on the bear market status highlight the significance of different timeframes in evaluating market conditions. Some emphasize short-term trends, while others view the larger picture to discern ongoing bullish momentum.

As discussions continue, the debate over whether the current crypto market constitutes a bear market illustrates the complex nature of market analysis, shaped by individual perspectives, definitions, and the timeframe considered.

Opinions on Bitcoin’s future trajectory are polarized as traders assess its price action relative to the 200-day exponential moving average (EMA), currently at $27,180. Some traders see the fact that Bitcoin is holding above this key level as a positive sign, suggesting a potential bottoming out.

“A lot of people are waiting for a better entry, but I don’t think it’s going to happen.”

Bullish vs. Bearish Sentiment

While some traders remain optimistic, others hold more bearish views, expecting a potential return to $25,000 or lower. The diverse perspectives reflect the uncertainty in the market as Bitcoin grapples with its short-term price movements.

BTC/USD 1-hour chart with 200-day EMA. Source: TradingView

Resistance and Upside Levels

Traders are closely monitoring Bitcoin’s ability to reclaim other bull market moving averages and resistances. Some proprietary trading tools indicate key levels to watch, with $27,760 and $24,750 highlighted as potential upside and downside levels, respectively. The balance between bullish and bearish sentiment will likely shape Bitcoin’s near-term price action.

BTC/USD annotated chart with 200-day EMA. Source: Moustache/X

Coinbase’s stock (COIN) experienced a substantial surge on August 29 following reports of a federal judge’s ruling favoring Grayscale in its legal dispute with the U.S. Securities and Exchange Commission (SEC). By the end of the trading session, COIN reached $85.13 per share, marking a remarkable 15% increase compared to the previous day’s closing price. Coinbase, the largest U.S. cryptocurrency exchange, has been listed on Nasdaq since 2021.

Screenshot showing Coinbase stock’s price increase. Source: Coinbase

Legal Victory for Grayscale Boosts Sentiment

A federal court decision on August 29 deemed the SEC’s justification for rejecting Grayscale’s proposal to convert its Bitcoin trust into a traditional exchange-traded fund (ETF) inconsistent. This ruling, perceived positively by investors, has ignited hopes for the potential introduction of a Bitcoin ETF. Coinbase is being considered as a partner for sharing surveillance data and acting as a custodian for some ETF candidates.

Potential for Bitcoin ETF and Market Collaboration

If approved, these ETFs would enable the sharing of trading, clearing, and customer identification data between Coinbase and other participants. The collaborative effort seeks to mitigate market manipulation risks and enhance the security of Bitcoin storage supporting the fund shares.

Despite the absence of a spot Bitcoin ETF in the U.S. due to SEC hesitancy, investors are eager for investment tools offering direct exposure to Bitcoin. Leading asset manager BlackRock, along with other notable applicants, is seeking SEC approval. CEO Larry Fink acknowledged substantial client demand for cryptocurrency exposure.

Bitcoin’s Market Performance

At the time of writing, Bitcoin was trading at $27,982 per coin, reflecting a more than 7% increase in the past 24 hours, as reported by CoinMarketCap. However, the cryptocurrency’s value remains significantly lower, nearly 60%, compared to its peak of $69,044 in November 2021.

In summary, Coinbase’s stock witnessed a surge due to a positive legal verdict for Grayscale against the SEC. The ruling potentially paves the way for a Bitcoin ETF, while Coinbase’s role in data sharing and custody further supports the market’s collaborative efforts.