Bitcoin fell 3% on Friday afternoon in New York after the Securities and Exchange Commission (SEC) said it would not consider applications for exchange-traded funds based on spot bitcoin prices until mid-October. The decline effectively erased a weekly gain propelled by a court win for ETF hopeful Grayscale, which is trying to convert a bitcoin trust to the exchange-traded format.

The leading cryptocurrency is now valued at $25,528, according to CoinGecko.

“The SEC’s decision again to kick the can down the road on the broader ETF applications means that nothing has really changed,” says Fred Pye, CEO of Canadian digital asset investment firm 3iQ.

The overall cryptocurrency market also contracted3% on a 24-hour basis to $1.08 trillion. Ether, the second-largest cryptocurrency by market capitalization, fell 3.2% to $1,611.

“It looks like there is a bit of doubt now as to the actual conversion date, and markets have pulled back as a result, seemingly waiting for some more clarity after perhaps overreacting,” says Conor Ryder, head of research at Portugal-based stablecoin issuer Ethena Labs.

Bitcoin
BTC
 gained 6% on Tuesday, adding on $50 billion to the market, after a federal appeals court ruled that the SEC’s denial of Grayscale’s request to turn its bitcoin trust, which trades under the ticker GBTC, into an ETF was “arbitrary and capricious.” The price rally lifted the value of the crypto market to $1.15 trillion.

The Grayscale Bitcoin Trust has traded at a discount to the net asset value of the cryptocurrency it owns since early in 2021, and conversion to an ETF would immediately eliminate practically all of the discrepancy. As of Thursday’s close, the discount was 20.6%, according to YCharts, wider than the 18.1% after the court decision on Tuesday but far tighter than the nearly 50% logged late last year.

The SEC has never allowed ETFs based on spot bitcoin prices, saying the market was too risky for retail investors. It does allow funds based on futures, which have surveillance protections, but since their prices are ultimately based on the spot market, the agency’s stance was deemed irrational by a three-judge appeals court panel.

Pressure has been growing on the government to accept spot ETFs after a slew of potential providers filed for permission to do so in June. That led the crypto market value of nearly $1.3 trillion in July, but the gain dissipated as the SEC showed no inclination to act on the applications of finance giants like BlackRock
BLK
, VanEck and Fidelity filed with the SEC. The Grayscale decision on Tuesday reinvigorated the market, but the subsequent SEC timeline announcement tempered the enthusiasm.

Regulatory activity has been the key driver in bitcoin prices this summer, says Andy Baehr, managing director of CoinDesk Indices. “Given low trading volumes and listless markets, regulatory news has been one of the larger drivers of price action,” he says. “Right now, regulatory news is driving the story.”

One ETF applicant, digital asset manager Bitwise Investments, decided to withdraw its proposal for a bitcoin and-ether fund. It did not cite a reason.

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