Bitcoin (BTC) did not crash by $4,000 in hours because of panic over United States regulators rejecting the spot exchange-traded fund (ETF).
That is the opinion of popular commentators after flash BTC price weakness sparked half a billion dollars of crypto long liquidations.
Report claims “no reason” to approve Bitcoin ETF
Coming at a conspicuous time for Bitcoin, which celebrates its 15th birthday on Jan. 3, the latest snap BTC price downside took the market down almost 9%, data from Cointelegraph Markets Pro and TradingView confirms.
Statistics resource CoinGlass puts the day’s current long liquidations tally at $514 million.
The move, while washing out both longs and open interest, accompanied a report from crypto financial services platform Matrixport, which led with an assertion that the U.S. Securities and Exchange Commission “will reject” the spot ETF.
“An ETF would certainly enable crypto overall to take off, and based on Gensler’s comments in December 2023, he still sees this industry in need of more stringent compliance,” it stated.
“From a political perspective, there is no reason to approve a Bitcoin Spot ETF that would legitimize Bitcoin as an alternative store of value.”
While the report immediately made its presence felt on the market, Matrixport failed to offer concrete evidence as to why the ETF was guaranteed to fail its debut.
The official window for the SEC to approve it begins on Jan. 4 and lasts through Jan. 10.
“Nothing goes straight up”
Reacting, trader, analyst and podcast host Scott Melker was at a loss as to the reasoning behind the firm’s perspective.
Related: 15 years, 90K 'Bitcoinaires' — Bitcoin millionaire wallets jump 300%
This is the “reason” for the dump.
— The Wolf Of All Streets (@scottmelker) January 3, 2024
I put reason in quotes, because this is really just a leverage flush.
Regardless, this is an OPINION with zero new information that flies in the face of everything shared by experts.
Are you guys that skittish? pic.twitter.com/inqMvPrb8r
Others suggested that the liquidations seen on the day were nothing unusual and, in fact, part of standard Bitcoin bull market behavior.
Related: Spot Bitcoin ETFs could be rejected if the SEC wants ‘more time’ — Analyst
“I know people are desperate for a narrative, but Bitcoin didn’t sell off because of some silly report about ETF denial,” crypto-focused litigator Joe Carlasare told subscribers on X (formerly Twitter).
“It sold off because nothing goes straight up and it’s an easy grab for liquidity to do a long squeeze. In short, the market was overbought.”
Matrixport, meanwhile, predicted only a modest further decline should a rejection become reality.
“If there is any denial by the SEC, we could see cascading liquidations as we expect most of the $5.1 billion in additional perpetual long Bitcoin futures to be unwound,” the report continued.
“We could see Bitcoin prices declining by -20% very quickly and falling back to the $36,000/$38,000 range.”
As Cointelegraph reported, downside targets had already put the mid- to low-$30,000 range as a popular floor.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.