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Bitcoin crashed this week, collapsing by almost 15% over the last seven days and dragging down the wider cryptocurrency market, wrote Billy Bambrough in Forbes. 

The bitcoin price, which has had an incredible start to the year, had been hovering around $10,000 per bitcoin before moving sharply lower – diving just as global markets went into freefall due to the spreading coronavirus. 

However, many thought bitcoin had begun acting as a so-called safe haven asset, rising as equity and riskier assets fell, and a ruling by the US Securities and Exchange Commission (SEC) against a long-hoped for bitcoin exchange-traded fund (ETF) might somewhat explain the sudden sell-off.

On Wednesday, the SEC rejected an ETF application from New York-based asset management firm Wilshire Phoenix and options exchange NYSE Arca that wanted to mix bitcoin and short-term Treasuries. 

“The Commission concludes that NYSE Arca has not established that the relevant bitcoin market possesses a resistance to manipulation that is unique beyond that of traditional security or commodity markets such that it is inherently resistant to manipulation,” the SEC said in a statement.

Bitcoin dropped some 6% on Wednesday, taking the bitcoin price below the psychological $9,000 per bitcoin mark and exacerbating a slump in the price. 

Bitcoin has now found a temporary floor of around $8,500 after its slide lower this past week. 

The SEC has rejected many applications for a bitcoin ETF over recent years, meaning this latest ruling didn’t come as a surprise. 

“I didn’t see any viable reason why this would be accepted when others were denied,” Bloomberg Intelligence analyst James Seyffart said

However, comments accompanying the ruling have suggested the SEC might not green light a bitcoin ETF for the foreseeable future.

SEC commissioner Hester Peirce, known as “crypto mom” in the bitcoin community due to her support of cryptocurrency products, said the rejection leads her “to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products – and only to bitcoin-related products.”

Wilshire had said it would work to counteract bitcoin’s volatility by investing in bonds if the bitcoin price fluctuated too heavily – and reversing that position as the price stabilized.

The bitcoin price has struggled recently after climbing over the last few months,

“We made every effort to get the SEC’s attention on this important issue, including undertaking extensive analysis that was made available to the SEC staff, submitting key data, and offering to provide additional information to facilitate the listing of a much needed regulated bitcoin-related ETP in the United States,” Wilshire Phoenix said following the ruling, adding it is “very disappointed.”

Earlier this year, bitcoin appeared to be boosted by geopolitical fears surrounding the escalating tensions between the US and Iran and then apparently gaining on fears the coronavirus could knock global trade – leading some to suggest the cryptocurrency had begun performing as a safe haven asset similar to gold or the Japanese yen. 

Following bitcoin’s crash this week, cryptocurrency market watchers appear to have returned to assessing bitcoin based on its own metrics.

“Bitcoin’s value isn’t derived from the same indicators as fiat, such as interest rates and GDP,” said the chief executive of crypto social trading platform HedgeTrade, Dave Waslen. “Bitcoin is purely driven by demand which is why it often remains steady when other markets are teetering.”

Looking ahead into 2020, bitcoin traders and investors have a lot to feel bullish about.

The bitcoin mining sector is gearing up for the looming May bitcoin halving event, which will see the number of bitcoin rewarded to miners cut by half – something many hope will be a positive for the bitcoin price.

Elsewhere, bitcoin is expected to be upgraded in a so-called soft fork later this year, a development that’s been called “one of the most innovative additions” that bitcoin’s had.

The soft fork, which is a change to a cryptocurrency’s protocol that doesn’t require all nodes to be updated and is backward-compatible, is expected to improve bitcoin’s privacy and scalability.

Alongside technical developments, a consumer app for bitcoin and cryptocurrency purchases from bitcoin futures exchange Bakkt will launch in the first half of 2020.

US coffee chain Starbucks will be its first launch partner, with the company one of the original backers of the crypto project, along with software giant Microsoft and Boston Consulting Group.