Despite what Tom Lee suggested back in July, the technicals of Bitcoin (BTC) haven’t behaved all that well since the string of bearish decisions by the U.S. Securities and Exchange Commission (SEC) regarding the approval of the various exchange-traded funds (ETFs) backed by the digital currency.

The issues began last month when the SEC rejected the Winklevoss Twins’ second attempt to list a Bitcoin ETF, citing concerns over fraud and manipulation of the digital currency. As a result, Bitcoin breached $8,000 but was ultimately rescued when a statement from SEC Commissioner Hester Peirce was released detailing official dissent from the agency’s ETF disapproval.

Bitcoin’s price took a second tumble into the $6,000-$7,000 range after the SEC announced that would postpone the decision on whether to allow the listing of the Cboe VanEck/SolidX ETF backed by Bitcoin to September 30.

Making matters worse, the SEC came out this week to issue two additional rejections to the proposed Bitcoin-backed ETFs from Direxion and ProShares. However, the market did not seem to take the news too heavily as Bitcoin didn’t drop in response.

This is likely due to the fact that everyone is patiently awaiting the outcome of the Cboe VanEck/SolidX ETF decision, as this is essentially the last shot for an ETF. Based on previous events, there are three possible outcomes. Here’s how I see each playing out:

  1. SEC Accepts ETF: Bitcoin surges, possibly triggering a major short squeeze. This would likely return it to the $8,000-$10,000 range, if not higher. This is the least likely of any option.
  2. SEC Rejects ETF: Bitcoin could drop hard but there is a chance that the result is already priced in. If the SEC is comfortable enough to give a full rejection, then it doesn’t bode well for a future approval anytime in the near future.
  3. SEC Defers Decision: Bitcoin drops, but the results will likely be short-lived. This is perhaps the most likely of any option, as it allows the SEC more time to make their decision without coming off as too hasty one way or another.

So, what exactly is the SEC looking for when they are reviewing these ETF proposals? Based on previous outcomes, the rejections weighed on the fact that the SEC believes the technology lacks as an innovation and investment, though the agency does not “rest on an evaluation of whether Bitcoin or blockchain technology more generally, has utility or value.”

More importantly, the SEC has cited fraud and manipulation as the major driver of their rejections and it hasn’t been a great past few months for Bitcoin, in this regard. Back in May, the U.S. Justice Department launched a criminal probe into Bitcoin price manipulation while in June, researchers at the University of Texas released a report that claimed that fraudulent transactions of Tether, a digital currency pegged to the USD, were responsible for approximately 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.

Things became a bit ugly earlier this week when Bitcoin surged in early morning trading on Wednesday after the leveraged cryptocurrency trading platform, BitMEX, entered into a scheduled maintenance period. BitMEX is currently one of the largest exchanges in the world by total volume, moving more than half a million BTC daily while offering investors access to a 100x leveraged Bitcoin derivatives market.

During the maintenance period, traders could not access their current shorts or take out additional contracts, giving bulls the opportunity to coordinate a run-up of $400 in a matter of minutes, as indicated by the chart below. That price was eventually dumped over the next 24 hours as BitMEx came back online.

This ultimately underlines the ongoing liquidity issues facing the Bitcoin market, which works against an ETF approval given that manipulation is still very much a problem.

CoinCodex

If you’re planning on trading the September SEC decision, it makes sense to hedge your investment both ways. However, it’s important to note that trading these type of events can be extremely risky. That being said, the current trend indicates that the SEC is not prepared to approve a Bitcoin ETF in any form and the outcome will likely be bearish.

That isn’t to say that buying Bitcoin at these levels is a terrible idea. During the recent ETF-fueled sell-off, Bitcoin made up significant ground in terms of total market dominance. According to data pulled from the AltDex 100 Index (ALT100), a benchmark index for large-cap cryptocurrencies and tokens, Bitcoin currently represents 56.28% of the total index weight. The next two largest cryptocurrencies, Ethereum (ETH) and Ripple (XRP), come in 14.11% and 6.48%, respectively. This indicates that the altcoin market is beginning to consolidate a bit, which is likely a positive indicator moving forward.

In the long run, an ETF approval isn’t the most important thing for the industry given that many institutional investors are already moving into the space, an exchange-traded note (ETN) is already available to U.S. investors, and adoption is coming in full force, as evident by the creation of the Bakkt exchange.

More: SEC Delays Decision for Bitcoin ETF Approval Until September
Related: Bitcoin Spikes After Leveraged Trading Platform BitMEX Goes Down for Maintenance

Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.