Crypto Market Plummets Amid Bitcoin Crash and Rumors of SEC's Rejection of ETF Applications
Summary:
Following a sudden market correction involving Bitcoin, Ether, and altcoins on January 3, cryptocurrencies have taken a hit. A Bitcoin dip of 10% virtually wiped out 2024's gains, trading roughly at $42,700. The downturn was triggered by market rumors that the SEC would reject pending Bitcoin spot exchange-traded fund applications, causing subsequent ripples in the derivative market. Consequently, more than $577.7 million in long positions was liquidated in 24 hours, indicating the high volatility inherent in the crypto market.
In the world of cryptocurrencies, there's been a significant dip today following a sudden downturn in Bitcoin (BTC), Ether (ETH), and secondary cryptocurrencies (altcoins) on January 3. The value of Bitcoin dipped by 10%, which practically wipes out any gains made in 2024, leaving its trading point hovering around $42,700. Cryptocurrency market's 1-day chart is a testament to this. We examine closely what caused Bitcoin's price to drop today.
The instability in the market was largely triggered by a dubious report concerning Bitcoin spot exchange-traded fund (ETF), causing investor unease. Hopes that the United States Securities and Exchange Commission (SEC) might approve one of 14 pending spot Bitcoin ETF applications in early January had boosted the BTC price above $45,000. However, there were shockwaves when a report from a financial services platform surfaced on Jan. 3 saying that the SEC was planning to turn down these spot Bitcoin ETFs. In consequence, cryptocurrency prices tumbled in the hour following the report's publication.
While some experts cast doubt that the report was responsible for the cryptocurrency market crash, attributing it instead to technical price metrics, the timeline of events does raise questions. The tense relationship between cryptocurrency and regulatory bodies, fueled by misunderstandings and a lack of trust regarding the actual utility of digital currencies, suggests that the spot Bitcoin ETF applications might be rejected to afford the SEC additional time to come to a final decision.
The ripple effect of this downturn across major cryptocurrencies incited a surge in liquidations within the derivative market. It's unclear whether the controversial report sparked the downturn, but what is clear is that optimistically inclined investors were taken aback, which brought about a swift wave of long-position liquidations.
Within the last 24 hours, more than $577.7 million worth of long positions has been liquidated across the cryptocurrency market, with $554.5 million gone in just the past 12 hours. Prices in the crypto market suffer when long positions in derivatives are liquidated without any buying pressure from the trading volume for support.
Around 196,848 traders were liquidated, the most substantial single instance of which involved a BTC and Tether (USDT) long valued at $14.26 million. Despite the positive outlook maintained by traders, a well-known index reflects a drop from the previous month.
The precipitous drop in price serves as a stark reminder that market volatility can rear its head without warning. As Arthur Hayes alluded on Twitter on January 3, the thrills and spills of the bull market are part of the game.
This news item does not constitute investment counsel or advice. Every financial transaction carries an element of risk, and individuals are urged to undertake their own investigation prior to making a decision.
Published At
1/3/2024 9:27:37 PM
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