The price of Bitcoin tumbled by more than 7% Wednesday, reversing the entire upside move that happened on Jan. 1 in a matter of minutes.
The slump accompanied a report from crypto financial services platform Matrixport, which asserted that the U.S. Securities and Exchange Commission (SEC) “will reject” all spot Bitcoin ETF applications this month.
BTC Nosedives To $42K
Bitcoin has posted a steep drop today, halting the ballistic rally that started on Monday.
According to data from CoinGecko, the BTC price has sunk by 7.6% over the past 24 hours, with the ascendant crypto currently changing hands for $42,157. Bitcoin’s price plunged as low as $40,500 during the flash crash, obliterating all gains registered in the past week.
Other crypto assets in the top 10 are also down, with ether (ETH) slipping by 8% to just $2,194. XRP has lost circa 9.8%, while Cardano dived by 10.9%. Solana (SOL), which in late December smashed past the $100 mark for the first time since April 2022, slumped by around 12.9% in the past 24 hours to $97.03.
The flash crash comes as crypto investors eagerly await the SEC’s decision on whether or not to approve one or all the 14 spot Bitcoin ETF applications in the coming days, with Bitmain-backed Matrixport predicting rejections in January.
$36,000 Incoming?
As ZyCrypto covered earlier, Matrixport expressed confidence in a Jan. 1 report that Bitcoin would soon skyrocket to $50,000, propelled by catalysts like an “imminent Bitcoin spot ETF approval.” The financial services firm also tipped the potential spot Bitcoin ETF greenlight could be announced even earlier than most expect.
Matrixport, however, made a shocking U-turn on its forecast, asserting in a Jan. 2 research note that the SEC will deny all spot Bitcoin ETFs this month, in contrast to the upbeat stance shared by Bloomberg Intelligence and JPMorgan strategists. Matrixport also said approvals for such investment products won’t come before Q2 2024.
“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,” Matrixport analyst Markus Thielen postulated.
Matrixport’s report estimates that traders have deployed roughly $14 billion of fiat and leverage on cryptocurrencies since speculations about ETF approval started swirling in September 2023. Matrixport expects a cascade of liquidations should the SEC reject proposals, with Bitcoin possibly dropping by over 20%. Such a downward move would push BTC back to the $36,000-$38,000 range.
Senior Bloomberg analyst Eric Balchunas has rebuffed bleak expectations in a post on X. “We have heard nothing to indicate anything but approval, but I want to give the guy the benefit of the doubt, so I’m asking if he has any sources or if he just speculating,” Balchunas said.
“To be clear tho: not saying rejection outright impossible,” Balchunas later added: “But we’ve heard nothing to indicate that.”
