Bitcoin () pulled back from yesterday’s high above $28,000 on Wednesday as investors mulled the implications of Grayscale’s court victory over the U.S. Securities and Exchange Commission (SEC).
The largest cryptocurrency by market cap was down 2% over the past 24 hours to $27,240. Ether () slightly outperformed, sinking 1.7% in the past 24 hours and hovering just above $1,700..
The broader crypto market mirrored the two leading assets’ move, with the CoinDesk Market Index dipping 2.4%.
Cardano’s ADA, Solana’s SOL and Polygon’s led the decline among major altcoins, falling near 4% during the day and erasing most of their Tuesday advance.
A federal appeals court yesterday ordered the SEC to review its rejection of investment manager Grayscale’s bid to convert its $14 billion Grayscale Bitcoin Trust (GBTC) into a spot bitcoin exchange-traded fund (ETF), spurring an immediate rally in digital asset prices and crypto-related stocks.
Market observers the decision as a landmark win that could potentially pave the way for a spot BTC ETF in the future. During the summer, a flurry of investment firms applied or renewed their bid to list such a product, including traditional finance giant BlackRock. Still, yesterday’s ruling does not automatically guarantee an approval of Grayscale’s or any other firm’s application.
How sustainable is the BTC rally?
While it’s too early to tell how sustainable Tuesday’s price jump was, “there are some small signs that we could see a slight reversal,” Clara Medalie, director of research at Kaiko, said in an interview with CoinDeskTV.
Notably, the rally was accompanied by modest trading volumes on exchanges relative to other “mini bull markets,” spiking only to a two-week high, Medalie said. Trading volume represents market participants’ engagement in the market, she explained, thus the lackluster volume figure could signal some weakness behind the move.
However, average BTC buy orders jumped to the highest since June, suggesting activity from large investors, which Medalie evaluated as “good news.”
“A wave of ETF approvals could definitely be the bullish catalyst the crypto market needs right now,” she said, adding that “we are still in the middle of a tumultuous period for the industry with quite a few bankruptcies and lawsuits ongoing.”
Market analyst Garreth Soloway forecasted further downside for bitcoin’s price in case it fails to break decisively above the $28,000 level where it traded before mid-August sell-off.
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“$28,000 is the price level at which the BTC price broke down. It is not uncommon for price to retrace to that level after a correction,” he explained in an emailed note. “BTC is still most likely to break down from the current levels, and the longer BTC trades sideways, the further the probable price decline.”
The support level to watch is around $25,000, the price at which bitcoin sat in mid-June when Blackrock filed for a spot BTC ETF, Soloway added.
Edited by Stephen Alpher.
