Bitcoin Dips 8.5% in 5 Hours Amidst ETF Uncertainty: A Rollercoaster Ride for Crypto Traders

Mintour January 06, 2024

 



Bitcoin witnessed a significant correction, plummeting 8.5% in just 5 hours following FUD (Fear, Uncertainty, Doubt) surrounding the predicted disapproval of the Bitcoin Spot ETF in January 2024. The price tumbled from approximately $45,400 to around $41,500, causing substantial losses in both the derivative and spot markets.

Bitcoin Takes a 8.5% Hit in 5 Hours 


The correction unfolded after a new narrative emerged from a prominent financial firm in the crypto industry, stating that the approval for the Bitcoin Spot ETF is unlikely in January 2024.





As a result, Bitcoin's price dropped by approximately 8.52% within a span of 5 hours, from 6:00 PM WITA to 10:00 PM WITA. Alongside this correction, the majority of other crypto prices experienced downturns, with an average correction exceeding 10%.


While the correction was short-lived, bringing relief as most prices bounced back, it left a significant impact. Within 24 hours, the crypto derivatives market suffered losses, with over $600 million liquidated. Notably, $540 million of this occurred within the first 4 hours after the FUD news circulated.


This FUD originated from Matrixport, a crypto investment service company catering to both retail and institutional clients. Managing a monthly transaction volume of around $5 billion on the retail side, and overseeing $3 billion in institutional funds with a monthly transaction volume of $1 billion, Matrixport's influence is substantial.

Market Players' Responses 


The official statement from Matrixport's analyst, shared on its website and Twitter, gained attention from over 1 million Twitter users.


In the statement, the Matrixport analyst expressed the view that the likelihood of approving the Bitcoin Spot ETF in January 2024 is minimal due to several unmet requirements. He further mentioned dissenting voices within the SEC ETF approval committee, diminishing the approval chances for January 2024.
The analyst added that if approval fails, Bitcoin could undergo a correction of around 20%, creating negative sentiment and concerns in the market. While this viewpoint was not unique to Matrixport, the firm's influence made it the most heard, leading many investors to attribute the correction to its analyst's statement.


Adding to the controversy, a day before the negative statement, Matrixport published an analysis of ETF approval that seemed optimistic, suggesting imminent approval. The seemingly inconsistent statements fueled suspicions of market manipulation for specific interests.


Following this negative sentiment, various crypto market participants closely monitored the ETF Bitcoin Spot developments, providing their own statements. Eric Balchunas, an analyst from Bloomberg specializing in the ETF industry, stated that there have been no other statements from the SEC or other government entities rejecting the ETF. He emphasized that everything is progressing as planned, with the potential approval of the first ETF in America still scheduled for January 8 to 10, 2024.




This perspective was echoed by James Seyffrat, a major asset manager involved with the Bloomberg team. In a Twitter post, he mentioned that the ETF is still under approval processes as scheduled for January 10, 2024.


This aligns with a report from Eleanor Terrett, a reporter at Fox Business, stating that there have been no changes in the SEC's approval process, with the final decision deadline set for January 10, 2024, for the first Bitcoin Spot ETF.




To boost confidence in ETF approval, a new narrative emerged, suggesting that SEC members are currently meeting with Nasdaq, NYSE, and other U.S. exchanges to finalize ETF trading on the American capital market. Consequently, the narrative has turned positive again, resulting in a reasonable uptick in prices.


However, the events of the previous day serve as a lesson that investors and traders should better process sudden news and not let emotions guide them before the reality unfolds. This perspective should be maintained as the ETF approval decision date approaches from January 8 to 10, 2024. Therefore, for significant investment decisions, it would be wise for investors or traders to wait until official news is released.

Conclusion: A Crypto Rollercoaster Ride Amidst ETF Speculation 


The crypto market, with its inherent volatility, continues to be influenced by external narratives, causing sudden price swings. As the crypto community eagerly awaits the potential approval of the first Bitcoin Spot ETF in the U.S., the market remains on edge, with every statement and speculation having a profound impact.


Investors and traders are reminded to approach market information with caution, verify sources, and consider the broader context before making decisions. The journey toward mainstream adoption and regulatory acceptance is bound to have its ups and downs, making it essential for participants to navigate the crypto rollercoaster with resilience 

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