Written by: Carl, Techub News
On January 3, people who were immersed in the activities commemorating the 15th anniversary of the creation of Bitcoin were brought back to reality by the news of Bitcoin's sharp correction.
According to the Binance market, at 19:00 on January 3, Beijing time, Bitcoin experienced a sharp correction. Within 1 hour, Bitcoin fell from US$45,000 to a minimum of US$40,750, a drop of over 9.4%, and an intraday drop of more than 10%. .
According to data from Coinglass, in just one hour of rapid decline, the entire cryptocurrency market contract liquidated nearly $500 million, and Bitcoin liquidated over $100 million.
Concerns about the rejection of Bitcoin spot ETFs emerged, and Matrixport reports became the trigger
Since the second half of 2023, Bitcoin spot ETFs have been the focus of the entire cryptocurrency circle. Amid long optimism, Bitcoin has risen from more than $25,000 in the middle of the year to nearly $46,000.
Lately, almost all eyes have been on the U.S. Securities and Exchange Commission’s (SEC) possible decision to approve a Bitcoin spot ETF on January 10. On January 3, the decentralized prediction platform Polymarket "Will the Bitcoin ETF be approved before January 15?" predicted the price of the Yes side of the contract to be 89 cents, which means that the market believes that the probability of approval is 89%, and Previously the figure was 50%.
At the same time, Bloomberg ETF analysts Eric Balchunas and James Seyffart both said that the probability of the Bitcoin spot ETF being approved before January 10 is 90%. However, James Seyffart also believes that although it is unlikely, there is still a possibility of rejection this month because the SEC may want more time.
Behind the optimism, many people are worried that Bitcoin will see a sharp correction.
An industry analyst told Techub News that regardless of whether the Bitcoin spot ETF will pass, Bitcoin will make a sharp correction, and even the earliest it passes, the sooner it may correct. In the past six months, the market has almost digested the news that the Bitcoin ETF may be approved, and any news of rejection may lead to a sell-off. Many people have been waiting for this moment.
On January 3, Matrixport released a report stating that the SEC is expected to reject all proposals in January because all applications fail to meet key requirements. The five-member SEC voting committee, dominated by Democrats, is unlikely to approve a Bitcoin spot ETF because it would legitimize Bitcoin as an alternative store of value.
Matrixport predicts that if the SEC rejects approval, the price of Bitcoin could quickly drop by 20%.
At the critical juncture of whether the SEC can approve the Bitcoin spot ETF, all investors have become frightened. There are many people in the market who expect that "Sell the news" will appear even if it is approved. At this moment when everyone's nerves are highly nervous, any News, good or bad, will trigger a chain reaction.
The selling of profit-takers, the aggressive entry of bearish investors, and the liquidation of long orders. After the initial decline, this series of actions drove the price to continue downward in the short term.
U.S. stocks have had a “bad start” and macro risks in the new year deserve attention
On January 2, the first trading day of 2024, U.S. Treasuries and most U.S. stock indexes had a "bad start." As of the close of the day, the Nasdaq fell 1.63%, the largest one-day decline since October last year, and the S&P 500 fell 0.57%. It opened nearly 0.5% lower today. In addition, Fed fund futures traders expect the Fed to cut interest rates 5-7 times by 25 basis points each in 2024, however, they have slightly lowered their expectations for the first rate cut in March.
Perhaps due to the need to take profits, or perhaps because the risk asset market has performed well for several consecutive months, the decline in U.S. stocks at the beginning of the year has made some investors more vigilant. The reason is actually very simple. If the macro environment is unfavorable, even if the spot ETF passes, Bitcoin, as an extremely risky asset, will not attract more investors.
It is worth noting that although the market is frantically hyping expectations of interest rate cuts, just like today's sudden collapse of Bitcoin, once the consensus of most people in the market is broken, such as the Federal Reserve delaying an interest rate cut or raising interest rates again, the destructive power caused may be difficult to Imagine. Previously, the "third leader" of the Federal Reserve and New York Fed President Williams took the lead in pouring cold water on expectations of interest rate cuts. He said that there is no real discussion of interest rate cuts at the moment, and the Fed must be prepared to raise interest rates again if necessary.
In addition, regarding the Bitcoin block reward halving that has been hotly speculated in the market, I would like to remind you that more than 90% of Bitcoin has been produced through mining. Is the speed of the remaining 10% output still important? Suspect.