Bitcoin ETF Decision Behind Large Number of Short Sells, Analysts Believe

Francisco Memoria
  • The US Securities and Exchange Commission (SEC) is set to decide whether to approve or reject two Bitcoin ETFs tomorrow, August 23.
  • The market, analysts believe, expects their rejection, and as such short sells have been growing.

Bitcoin, recently managed to break through the $6,600 resistance after adding $400 in about 20 minutes as scheduled maintenance at derivatives exchange BitMEX triggered a massive short squeeze. The squeeze, some analysts believe, could be an indirect consequence of an upcoming bitcoin ETF decision.

As CryptoGlobe covered, the US Securities and Exchange Commission (SEC) set August 23 as the deadline for its decision on two bitcoin exchange-traded funds (ETFs): the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF.

A potential crypto ETF has been heavily influencing the market in the last few weeks. Earlier the SEC rejected the Winklevoss twins’ ETF application, a move that saw BTC lose 3.5% of its value.

The regulator’s decision on the ProShares ETFs comes at a time in which BTC shorts came close to an all-time high. As covered interest in shorting bitcoin surged this month, as the flagship cryptocurrency was unable to breach the $6,600 resistance.

As founder Alex Sunnarborg put it:

Unlike the VanEck-SolidX Bitcoin ETF, set to be decided by September 30, the ProShares ETFs are backed by BTC futures contracts, sourcing their liquidity directly from the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE), two regulated exchanges trading BTC futures.

The VanEck-SolidX ETF is set to be backed by actual bitcoin, and to get its liquidity primarily from over-the-counter (OTC) desks, whose volume surpasses that of the regulated exchanges futures contracts, Sunnarborg pointed out.

Taking these factors into account, he added the market is likely expecting the ProShares ETFs to be rejected, and a BTC price fall as a result. Given the short sells’ all-time high, he predicted the short squeeze would come

Although the market expects the rejection of the ProShares ETFs, the VanEck-SolidX ETF decision may see the world’s first bitcoin ETF enter the market as the flagship cryptocurrency is about to see added liquidity in secure, regulated products like Bakkt’s physically settled futures contracts, and Fidelity’s exchange-traded note (ETN).

As other analysts point out, however, a bitcoin ETF may be further than expected as the cryptocurrency’s volatility is detrimental towards its approval. The recent short squeeze saw the cryptocurrency add about $400 in only 20 minutes, and wasn’t an isolated case as in July another squeeze cost short sellers $180 million in a similar time period, in which bitcoin surged $600.

As Krüger put it, even if the market isn’t being manipulated – something the US Department of Justice has launched a criminal probe into – BitMEX’s influence over the market is notable, as it is an unregulated exchange trading over $3 billion worth of crypto every day. As covered, it traded a record $8 billion in 24 hours last month

Hamas' Military Wing Asks Supporters for Bitcoin Donations, Again

Francisco Memoria

The Al-Qassam Brigades, the military wing of an organization designated as a terrorist group in Europe and the United States currently in control of the Gaza Strip, Hamas, have recently called on supporters for Bitcoin donations.

According to the Israel National News, the group has asked for cryptocurrency donations through a special page on its website that asked supporters for BTC to “Support the Resistance,” in a campaign that sees it state there’s a duty to “support jihad because Jerusalem is an integral part of the Islamic faith.”

This is notably not the first time the group asks its supporters for donations in the flagship cryptocurrency. Back in January, CryptoGlobe reported that a Hamas spokesperson, Abu Obeida, asked supporters for BTC via Instagram, in a post that read:

The Zionist enemy fights the Palestinian resistance by trying to cut aid to the resistance by all means, but lovers of resistance around the world fight these Zionist attempts and seek all possible means to aid the resistance.

The group has reportedly been looking to raise funds via cryptocurrency as it has faced financial woes in the last few years, as banks throughout the world have been distancing themselves from the organization. Hamas’ representative blamed Israel for its current situation earlier this year.

Hamas Tried To Raise Funds Through Coinbase

As reported, Israel-based blockchain intelligence startup Whitestream tracked down two bitcoin donations the cash-strapped group received after the January plea. Per Whitestream, Hamas’ address showed the group was using Coinbase, and received “two relatively small bitcoin donations” amounting to “only $2,500.”

These are said to have come from a bitcoin trader in Khan Yunes, a small town located in the Gaza Strip. Hamas, at the time, published two bitcoin addresses to receive funds, and the Israeli-based firm believes it had to do so after Coinbase blocked the first one.

Notably, the group’s military wing is asking for donations shortly after a Gaza rocket hit a home in central Israel, according to the BBC.