Not too long after touching a high of $45,000 for the first time since April 2022, bitcoin witnessed a sharp fall to trade at $42,685 on Wednesday, registering a 6 percent fall in 24 hours, CoinMarketCap data revealed.
Following a high of $45,500 on Wednesday, bitcoin slipped to as low as $40,550, registering 10.9 percent fall before bouncing back to $42,200, revealed CoinDesk data.
The unanticipated slide is seen as an outcome of jitters around the expected approval of a spot bitcoin ETF.
The fall has wiped off most of the gains that took place on Jan 1 which led to the liquidation of $500 million of positions across derivatives exchanges.
Ironically, the massive slide coincides with the release of a new video by ETF applicants Galaxy and Invesco commemorating bitcoin’s birthday.
What led to the fall?
Experts point out that there are several reasons for the fall, which include the lower likelihood of passage of ETF, decline in stocks of companies which deal in the mining off cryptos and the rising sell-offs.
One user Greeks.live wrote on X Platform, “The likelihood of the ETF’s passage became less and less likely, and the market saw a stalemate. Weakness in crypto mining stocks, and the sell-off in several crypto-related U.S. stocks, also reinforced the market’s skepticism.”
Other crypto tokens also followed suit with Ethereum losing 6.91 percent to trade at $2,228, Solana fell 12 percent, ripple lost 13 percent of its value and Cardano fell over 10 percent in the past 24 hours.
It is vital to mention here that bitcoin ETF was expected to be approved as soon as Tuesday or Wednesday, Reuters had reported citing sources.
Conversely, financial services firm Matrixport rebuffed the optimism in a report.
“From a political perspective, there is no reason to approve a bitcoin spot ETF that would legitimize bitcoin as an alternative store of value,” the report reads.
“While we have seen frequent meetings between the ETF applicants and staff from the SEC, which resulted in the applicants refilling their applications, 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,” the report further adds.
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