Bitcoin Drops 10% on ETF Rejection Rumors

Bitcoin fell almost 10% this Wednesday morning (3) after rumors spread that the US Securities and Exchange Commission (SEC) will reject all ETFs this week.

The fall of the digital currency started after Matrixport published a report stating that the US regulator will reject all proposals for bitcoin spot ETFs. The forecast contradicts the market’s general optimism about the adoption of such ETFs.

The company’s analysts based the analysis on current policy and compliance issues, highlighting recent statements from SEC Chairman Gary Gensler about the need for stricter compliance in the cryptocurrency sector.

The SEC chairman highlighted the challenges of fraud and non-compliance in the industry and reiterated the commission’s caution regarding approving new cryptocurrency-based financial products.

Matrixport’s expectation is that, with the SEC’s likely rejection, there will be successive liquidations in the market, which will negatively impact the price of Bitcoin. The analytics company predicts a possible drop of up to 20%, bringing the value of the cryptocurrency to $36,000.

Bitcoin Drops After ETF Rejection Rumors (Image: CoinMarketCap)
Bitcoin Drops After ETF Rejection Rumors (Image: CoinMarketCap)

Bitcoin falls under ETF rejection rumors

Matrixport’s pessimistic forecast appears to have damaged investor confidence. Bitcoin, which was trading at $44,700 before the report’s release, suffered a sharp decline of almost 10%, reflecting market jitters.

The news is especially striking considering that Bitcoin has seen growth of approximately 11% since the beginning of the year and 67% in the past three months.

Bitcoin’s crash also caused a red wave in the market, liquidating more than $460 million worth of long positions in just one hour.

Long-term traders on major exchanges suffered significant losses, around $462 million, according to data from CoinGlass.

The catastrophic scenario took place in the last 24 hours and resulted in the liquidation of 172,626 traders. Of the total, long settlements totaled $557 million, while short settlements totaled approximately $58 million.

OKX, one of the industry’s leading brokers, was the hardest hit, with settlements of more than $230 million. It was followed by Binance, with $105 million, and Huobi, with about $74 million.

Most of these liquidations took place in the last hour, with the value of liquidated positions reaching a staggering $487 million, according to data from CoinGlass.

The Bitcoin futures market was similarly affected, recording $110 million in short and long liquidations over the past day. Additionally, Ethereum-linked futures also faced turmoil, with more than $82 million in liquidations.

Matrixport warned traders in a recent post on Twitter of the need to hedge their risks, despite the SEC chairman’s skepticism.

The company also expected a potential decline in Bitcoin’s price of up to 20% following the ETF’s rejection, although it maintains a positive outlook for the end of 2024.

Source: Live Coins