Bitcoin has experienced a significant 8% drop, wiping out the gains accumulated since the beginning of the month and causing a wave of liquidations.
The expectations surrounding the approval of Bitcoin spot ETFs by the SEC are strongly influencing market movements, with uncertain prospects.
Financial services firm Matrixport anticipates a global rejection of ETF applications by the SEC this month, postponing any possibility of approval until the second quarter of 2024.
Wednesday saw a sharp decline in Bitcoin, triggering the liquidation of $400 million in derivative market positions in just two hours. This drop comes amidst increasing nervousness surrounding the anticipated approval of a Bitcoin spot ETF, amid rumors of rejection.
Uncertain market and Matrixport’s dissenting voice
The setback has erased all gains observed since January 1st, reflecting high volatility and market sensitivity to news regarding ETF regulations.
Contrary to the optimistic expectations of some market segments, financial services firm Matrixport has expressed a significantly less favorable position. According to them, all ETF applications lack a critical element necessary for approval by the SEC. Matrixport believes that even if this requirement could be met by the second quarter of 2024, the SEC is likely to reject all proposals this month, contributing to a more pessimistic mood in the market.
Market reaction and prospects
In response to these rumors, Bitcoin dropped from $45,500 to $40,550 in an instant before recovering slightly to $42,500. Open interest decreased by $2 billion due to liquidations, BTC devaluation, and reduced exposure of traders on both the long and short sides.
Bloomberg analyst Eric Balchunas, on the other hand, reports not having received any information suggesting a potential SEC refusal.
