The number of investors betting that Bitcoin (BTC), the leading cryptocurrency, will decline has been increasing during the month of August amid rising volatility in the digital token market and a steep sell-off.
MarketWatch, citing Bitfinex, the fourth-largest cryptocurrency exchange, reported the exchange has seen bets against Bitcoin double since the start of the month. As of Aug. 15, the outstanding short interest on the exchange was at more than 36,000 BTC. On Aug. 1 it was at 18,000 BTC, reported MarketWatch. (See also: Crypto Market Caps Plummet on Bitcoin ETF Woes.)
Cryptocurrencies Dealing With Sell-Off
The increases in negative bets on Bitcoin come amid a broad sell-off in cryptocurrencies in recent days. As concerns rise that entrepreneurs are cashing out their initial coin offerings and that some digital tokens including Bitcoin may have become overvalued, nearly all of the largest cryptocurrencies fell earlier in the week. The declines in August come on the heels of a rally in July as investors bet a Bitcoin exchange-traded fund (ETF) would receive regulatory approval in the U.S., but regulators withheld approval for now.
Many investors view Bitcoin and cryptocurrency ETFs as a way to bring legitimacy to a market that is anonymous and unregulated. Investment firm VanEck and Solid X, a financial service company, partnered earlier in the year to get approval for a Bitcoin ETF, but these efforts were rejected by the SEC. The SEC decided to delay making a decision until Sept. 30. But with no SEC-driven rally in sight, cryptocurrencies declined. On Monday, of the largest 100 cryptocurrencies tracked by Coinmarketcap.com, only one traded higher. The market capitalization of the top 100 digital tokens combined declined to $193 billion, a far cry from their combined value of $835 billion back in January. The lack of optimism on the part of crypto investors resulted in digital tokens declining in seven of the first eight days in August. (See also: How Cryptocurrency Pump-and-Dump Scams Work.)
Still, not everyone thinks it will continue to decline. Chris Yoo, portfolio manager at Black Square Capital, told MarketWatch he thinks the cryptocurrency market is near the end of the bearish sentiment. “Most importantly, the ecosystem will continue to develop and grow from the increase in talent and public awareness, leading to the recovery of the market in the near future,” he said.
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