Not too long after touching a high of $45,000 for the first time since April 2022, bitcoin witnessed a sharp drop to trade at $42,685 on Wednesday, registering a 6 percent drop in 24 hours, CoinMarketCap data disclosed.
After a high of $45,500 on Wednesday, bitcoin slipped to $40,550, registering a 10.9 percent drop before rebounding to $42,200, revealed. CoinDesk data
The unexpected slide is seen as a result of jitters around the expected approval of a spot bitcoin ETF.
The drop wiped out most of the gains that occurred on January 1, which led to the liquidation of $500 million of positions through derivative exchanges.
Ironically, the massive slide coincides with the release of a new video by ETF candidates 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 probability of ETF passage, a decrease in stocks of companies that deal with crypto mining and the increasing sales.
One user Greeks. long live wrote on X-Platform, “The likelihood of the ETF’s move became less and less likely, and the market saw a stalemate. Weakness in crypto-mining stocks, and the sell-off in several crypto-related US stocks, also strengthened the skepticism of the market.”
Other crypto tokens also followed with Ethereum losing 6.91 percent to trade at $2,228, Solana falling 12 percent, ripple losing 13 percent of its value and Cardano falling over 10 percent in the past 24 hours.
It is essential to mention here that bitcoin ETF was expected to be approved as soon as Tuesday or Wednesday, Reuters reported citing sources.
Conversely, financial services firm Matrixport countered 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.
“Although we have seen frequent meetings between the ETF applicants and staff of the SEC, which resulted in the applicants filling out their applications, we believe that all applications do not reach a critical requirement that must be met before the SEC will approve. This may be completed by Q2 2024, but we expect the SEC to reject all proposals in January,” the report added.
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Published: 03 Jan 2024, 19:36 IST