Bitcoin posted deep drawdowns in the crypto market as it fell as much as 8% on Wednesday on anxiety around the anticipated approval of a spot Bitcoin ETF began to enter the market.
The drop retraced the entire upside move that occurred on Jan. 1, spurring the liquidation of more than $600 million worth of positions across the digital asset space.
In the past 24 hours, 181,697 traders were liquidated, and the total liquidations come in at $634.48 million The largest single liquidation order in the crypto market happened on Huobi – BTC-USDT valued at $14.26 million
Following a morning high of $45,500, bitcoin dropped to as low as $40,800 before bouncing back to $42,200. Open interest fell by $2 billion due to liquidations, the dwindling value of Bitcoin, and crypto traders reducing exposure on both the long and short side.
Other digital assets in the top 10 also plummeted, with Ethereum losing almost a tenth of its value to less than $2,200 and Solana plummeting more than 15% in one day to less than $98. XRP fell over 10% and Cardano fell 14D44.
The “news” event comes as the crypto market prepares for the SEC’s decision on whether to approve several spot Bitcoin ETF applications in the coming days, with some analysts turning more pessimistic
Matrixport analyst Markus Thielen in a research note highlighted said that the SEC will not file for a Bitcoin spot ETF in January, contrary to the optimism of analysts at Bloomberg Intelligence and JPMorgan. He further argued that they were likely to reject everything.
Additionally, Matrixport stressed that regulators lack the political incentive to greenlight spot ETFs, which would lend legitimacy to Bitcoin as an alternative store of value.
This lack of incentive casts doubts on the likelihood of rapid regulatory approval. This prediction is inconsistent with general market sentiment, as several observers doubt that regulators may approve various pending applications by the end of this week. Matrixport also stated that if the SEC rejects the application, the price of BTC could drop to $36,000.