- It was the media hype of the ETF rejection report that led to the liquidations, not the report itself.
- Analysts noted that immediate approval for a Bitcoin ETF is within reach.
The cryptocurrency market witnessed one of its darkest hours on January 3rd like the price of Bitcoin [BTC] It dropped to less than $42,000. The collapse happened very quickly amid rumors that all Bitcoin ETF applications had been rejected.
the details
In a report published by Matrixport, the digital asset company found that the applications do not meet the required requirements. He also stated that SEC Chairman Gary Gensler's reluctance to embrace cryptocurrencies may play a role in the rejection.
However, AMBCrypto's investigation showed that Matrixport was not the main reason for the price reaction.
This is because the article was just an opinion and Matrixport did not have the “clout” to nuke the market. There were also posts to explain How the company's CEO Jihan Wu had no credibility in matters related to ETFs.
Cryptocurrency investor and analyst Scott Melker shared a similar opinion in his post on the same day.
the @realMatrixport The report is not “fake news” as many say. He is an analyst giving an opinion. We all do it daily.
We are mostly wrong.
It's gone viral.
They are allowed to express their opinion.
They couldn't know that their research report would shake up the market.
– Wolf of All Streets (scottmelker) January 3, 2024
Once again, misinformation excites the market
From AMBCrypto's findings, the report became fake news because a major publication amplified it. Therefore, the participants panicked and began taking drastic measures while causing the liquidation of more than $500 million.
This incident was similar to one that occurred in October 2023. At the time, another major publication reported that BlackRock had gotten the green light to launch its own ETF. As a result, the price of Bitcoin jumped from $27,000 to $30,000 in the blink of an eye.
Moments later, the newspaper apologized for “misleading” the market. The apology then brought Bitcoin back to $28,000. But in between all that, traders with open contracts felt the heat as $85 million was wiped out.
During that period, Michael O'Rourke, chief market strategist at JonesTrading, said:
“The fake news about the approval of a Bitcoin ETF highlights the challenge of protecting investors in an unregulated space that attracts shady operators and rampant speculation.”
As a highly volatile market, fake news poses a serious threat to players who are genuinely interested in the development of the industry. However, it is also important to note that the blame should not be placed entirely on posts that spread misinformation.
The decision is approaching and may be positive
Regarding the latest episode, people familiar with the matter explained the developments. For example, Fox Business reporter Eleanor Terrett posted that proceedings regarding Bitcoin ETFs are nearing the final stages.
The update provided on January 3 reads:
“Although a final decision has not been made, sources close to the proceedings say the SEC may begin notifying issuers of the approval on Friday with trading starting as early as next week. ETF analysts and issuers alike remain confident that A positive SEC decision will be made on or before January 10, as the SEC continues its meetings with key players on this matter.”
At press time, Bitcoin's price has recovered, trading at $43,129. If the SEC makes a positive announcement regarding ETFs by the above-mentioned date, players are optimistic that Bitcoin will rise above $50,000.
One of those predicting a rise is Christopher Enckes.
Enix is a trader and prides himself on being an expert in market psychology. According to him, Bitcoin may collapse to $53,267 within a short period.
As mentioned in the presentation with @scottmilker This morning, we are seeing a nice rally off of this morning's flow. H4 candle closed above the hourly pivot. Daily looks better. A break to the upside should see a target at around 53267, at least, on this chart. #Bitcoin $ Bitcoin pic.twitter.com/ykocFr3Ueo
— Christopher Enks (Trader/Market Psychology Coach) (@TXWestCapital) January 3, 2024
At the same time, the emerging reports were no confirmation that the SEC would not deny the applications.
Meanwhile, on-chain data showed that Bitcoin trading volume reached an incredible high. At the time of writing, the volume reached $47.38 billion.
The rise in volume was a sign that the drop had filled up too quickly. Like volume, Bitcoin weighted sentiment rose to 2.19.
Source: Santiment
Weighted sentiment shows the unique social volume or comments associated with the project. So, a positive reading suggests that the broader market has its eyes on a potential ETF approval within the next few days.
Who will blush last?
Metrics indicate that players have moved beyond fake news, and are now standing their ground based on personal feelings. However, both buy and sell trades are at risk of liquidation as shown in the liquidation heat map.
The liquidation heat map predicts price levels where large-scale liquidation events may occur. According to AMBCrypto's analysis of the HyblockCapital indicator, short trades with targets between $40,750 and $41,250 can be liquidated.
Also, those with open positions who believe Bitcoin will drop to $36,000 could be affected by the inflow. For long positions, there was a pool of liquidity of about $47,100. Therefore, traders may need to be careful around this level.
Source: Hyblock Capital
In conclusion, recent events have shown that cryptocurrencies are still vulnerable to inaccurate information.
Although Jihan Wu Clarification Since its analysis was not aimed at a price collapse, crypto media must take responsibility for not participating in this intentional or unintentional misrepresentation.
Read Bitcoin price predictions 2023-2024
However, the January 3rd shakeup is unlikely to impact the SEC's decision regarding spot Bitcoin ETFs.
Although the path to approval looks promising, it is important to wait until the regulator itself confirms its position.
