Bitcoin fell 8% on Wednesday as investors worried about the expected approval of a spot Bitcoin (BTC) ETF.
This decline retraced the entire upward gain seen on January 1, resulting in the liquidation of $500 million in futures holdings across exchanges.
As the possibility of ETF acceptance decreased, market sentiment shifted, resulting in a perceived deadlock. Scepticism was fueled by weakness in crypto mining equities and a broader sell-off in crypto-related U.S. stocks.
Despite earlier claims that a bitcoin ETF might be approved as soon as "Tuesday or Wednesday," according to sources, financial services provider Matrixport took a more cautious approach.
Matrixport stated, "We believe all applications fall short of a critical requirement that must be met before the SEC approves. This might be fulfilled by Q2 2024, but we expect the SEC to reject all proposals in January."
Following a morning high of $45,500, bitcoin fell to as low as $40,550 before recovering to $42,200.
This volatility resulted in a $2 billion fall in open interest, owing to liquidations and traders lowering exposure on both the long and short sides.
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