Bitcoin was back on the offensive Saturday, rebounding from a $200 correction triggered by the SEC’s decision to reject a high-profile digital currency ETF.
The BTC/USD exchange rate rose 6.2% to $1,186.16 at 12:28 p.m. ET, according to CoinDesk BPI. Prices fluctuated wildly throughout the day, reaching a low of $1,112.14 and a high of $1,200.38.
The digital currency was knocked off record highs on Friday after the U.S. Securities and Exchange Commission denied what would have been the first exchange-traded fund designed to track bitcoin.
After years of effort, investors Cameron and Tyler Winklevoss were unable to convince regulators to approve their bitcoin ETF. The application intended to list the asset on the Bats exchange, which is owned by CBOE Holdings Inc.
“Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated,” the SEC said in a statement. “The Commission notes that bitcoin is still in the relatively early stages of its development and that, over time, regulated bitcoin-related markets of significant size may develop.”
Speculation that the SEC would approve the Winklevoss application sent bitcoin to record highs this month, as investors rightly believed that an ETF tracking the digital currency could encourage more investors to buy the asset. ETFs offer numerous advantages, such as transparency, affordability and tax efficiency, that make them extremely popular among retail investors.
Research from PricewaterhouseCoopers forecasts the global ETF market to reach $5 trillion by 2020.
The failure of the Winklevoss ETF suggests bitcoin may languish due to limited adoption. For conventional investors, bitcoin remains the source of instability and risk. That risk was demonstrated last summer after a high profile security breach at Hong Kong-based Bitfinex resulted in the loss of over $70 million worth of bitcoins. The breach heightened concerns over a lack of insurance and loss recovery in the market.
Despite these challenges, bitcoin emerged as the best performing currency of 2016 thanks to.a buying frenzy in mainland China, as investors sought to diversify away from a volatile yuan after repeated central bank devaluations.