On Wednesday morning, the price of Bitcoin (BTC) dropped by 7%, reaching a low of $41,804.95, following rumors that the SEC might turn down Spot BTC ETF applications.
During the U.S. trading hours on Wednesday, Bitcoin (BTC) experienced a 7% plunge, dropping to as low as $41,804.95 before exhibiting a modest recovery. Currently, BTC is priced at $43,005.28 according to CoinMarketCap. The market turmoil was attributed to widespread rumors of potential rejection or postponement of the highly anticipated Spot Bitcoin ETF by the SEC.
Amidst the turmoil, reports on social media underlined that the BTC price decline might have been prompted by speculations about the SEC's stance on Spot ETF applications. A research report from the US-based Asset Management firm Matrixport, authored by Markus Thielen, expressed a pessimistic outlook regarding the SEC potentially delaying the ETF approval until Q2 2024.
The report was released around 5 a.m. Eastern Time, which seemed to trigger panic selling among BTC holders, resulting in a rapid 7% downturn and a breach of the $42,000 price level for the first time since December 18. Concurrently, Bitcoin derivative traders, predominantly holding LONG positions, faced significant losses due to record Funding fees and the uncertain ETF verdict from the SEC.
According to Coinglass, a prominent derivative data tracker, Bitcoin's price decline led to substantial liquidation across the crypto futures markets, amounting to over $686 million in trades by 5 p.m. Eastern Time. Notably, BTC LONG traders bore the brunt of the impact, with approximately $165.94 million in bullish contracts being liquidated, representing about 24% of the total liquidated trades within the daily timeframe. However, several market analysts have suggested that the impact of BTC Spot ETF rejection rumors was heightened by these liquidations.
Despite the market turbulence, the BTC price has since rebounded above the $43,000 level, signaling attempts by bullish traders to counteract the prevailing market fear, uncertainty, and doubt (FUD) and regain positive momentum.
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