SEC Rejects Another Spot Bitcoin ETF, Binance Announces New System to Remove BNB from Circulation

Ahead of the winter season holidays, the crypto market is struggling to maintain its gains.

While many are expecting the liquidity thin weekend to send crypto prices higher into the year-end, for now, the market is stuck. Bitcoin has fallen back under $49k, and Ether is below $4k. BTC 5.51% Bitcoin / USD BTCUSD $ 51,068.13
$2,813.855.51%
Volume 28.45 b Change $2,813.85 Open $51,068.13 Circulating 18.91 m Market Cap 965.66 b
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ETH 3.82% Ethereum / USD ETHUSD $ 4,101.33
$156.673.82%
Volume 16.91 b Change $156.67 Open $4,101.33 Circulating 118.87 m Market Cap 487.51 b
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“Everyone who wanted to de-risk for the holiday already has. China forced selling ends in 1 week. It’s Christmas. Holiday volumes are low, yet price creeps upwards as short-side OI pumps. When all the sellers have finished selling, which way does price go?” commented Charles Edwards of Capriole Investments.

This week, investment firm Kryptoin’s proposal for a spot Bitcoin exchange-traded fund (ETF) was rejected by the US Securities and Exchange Commission (SEC).

In a letter on Wednesday, the SEC announced its rejection, eight months after the agency first began evaluating the application. Just last month, the SEC rejected VanEck’s application for a spot Bitcoin ETF. It postponed the decision on Bitwise’s physically-backed bitcoin ETF and Grayscale’s Bitcoin Trust’s (GBTC) conversion to ETF.

This, however, wasn’t unexpected, as SEC Chair Gary Gensler has said numerous times that he prefers Bitcoin futures ETF over one that holds Bitcoin directly.

The first bitcoin futures ETFs, the ProShares Bitcoin Strategy ETF (BITO), first began trading in October. After that, two more Valkyrie Bitcoin Strategy ETF (BTF) and VanEck Bitcoin Target ETF (XBTF) were launched.

“The Bitcoin Futures ETF that launched this year has been widely regarded as not very retail-friendly given the high costs involved of rolling over contracts which amounts to around 5-10%,” said Vijay Ayyar, vice president of crypto exchange Luno. “Increasing pressure/evidence… points to a Bitcoin Spot ETF being approved in 2022 mainly because the market is now large and mature enough to support one.”

Meanwhile, the total crypto market cap is still keeping above $2.4 trillion.

Amidst the ongoing lethargy, leading crypto exchange Binance’s native token BNB is trading around $530, down 22.6% from its ATH hit in May. This has been despite Binance completing its 17th burn of 1.335 million BNB. BNB 2.67% Binance Coin / USD BNBUSD $ 545.53
$14.572.67%
Volume 1.86 b Change $14.57 Open $545.53 Circulating 166.8 m Market Cap 90.99 b
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Binance also announced that from now on, it would use a new system to remove BNB from circulation to better reflect their usage in the Binance Smart Chain ecosystem (BSC). BSC, introduced in April 2020, currently has $16.7 bln in total value locked (TVL), down from $31.7 in May.

The new system is dubbed Auto-Burn, and under this, BNB burn will be independent of revenues generated on the Binance CEX; rather, it will be automatically adjusted based on the price of BNB and the token’s supply and demand dynamics based on on-chain information. This new system, the exchange said, will provide greater transparency, autonomy, and predictability.

BNB Auto-Burn will be halted once the total circulation of BNB drops below 100 million. The circulating supply of BNB is currently 168 million.

Author: Shantun Parmar

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