Bitcoin fell on Wednesday, erasing almost all of its gains recorded in the first two days of the year, ahead of a key deadline by which the U.S. Securities and Exchange Commission will decide whether to approve exchange-traded funds that invest directly in bitcoin.
It fell 5.7% over the past 24 hours to a low of $40,838 on Tuesday, after Tuesday's rally took it past $45,000 to the highest level since April 2022, according to CoinDesk data. Bitcoin rose more than 150% in 2023, but the cryptocurrency is still 35% below its 2021 peak.
Cryptocurrency market participants generally expect the SEC to approve a bitcoin exchange-traded fund by January 10, when the agency must decide whether to approve the application submitted by ARK Investment and 21 Shares.
However, some have different views. Markus Thelen, an analyst at Matrixport, wrote in a note on Tuesday that he expects the SEC to reject all applications for bitcoin ETFs this month, as the applications may not meet the requirements they must meet.
Some blamed the report for causing Bitcoin's price to fall on Wednesday. “Given that the market has been in a bullish mode with leverage, any rumor would trigger a leverage cascade,” Gautam Chogani and Mahika Sapra, analysts at Alliance Bernstein, wrote on Wednesday.