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Crypto is Cooling Off: Here is the Reason Behind the Dip
- A major market correction has hit after Bitcoin ETF anticipation fuelled a rally over the past few months.
- A Matrixport report predicting delay and shorting triggered widespread panic across the top coins.
- However, an expert from Bloomberg has countered this argument, suggesting approval is still likely.
The crypto market has suffered a significant blow over the past 24 hours, with most major coins in the top ten dropping by 5-10%. Such wild swings are not exactly unheard of among the cryptosphere, however, it is a noteworthy drop given the anticipation around Bitcoin’s impending spot ETF approval. So what’s the reason behind the sudden fall?
Report from Matrixport Sent Market Spiraling
The entire crypto community is waiting with bated breath to see how the market reacts to the upcoming ETF approval from the Securities and Exchange Commission (SEC). With rumours circling that applications may be finally accepted as early as today, the price of Bitcoin had pumped all the way above USD $45K (AUD $66K). However, there is one problem with such tunnel vision on one event – any setbacks can cause a wave of panic to sweep through the market.
Yesterday, Markus Thielen of Matrixport released a two-page report on why the SEC would deny the BTC ETF approvals once more, causing major delays and recommending that traders “go short” on Bitcoin for the month of January. The article was republished through multiple high-profile media sources, such as Coindesk and Forbes, potentially causing the bloodbath we’ve experienced over the past day.
Interestingly, Bitcoin has been one of the least-affected coins out of the top 10 by market cap, sinking by 5% over the past 24 hours. Meanwhile, other cryptocurrencies that aren’t hedging on potential ETF approval have seen losses of 10+% (Dogecoin, Avalanche). This demonstrates just how much the entire crypto market is hinging on the SEC’s announcement in the coming weeks.
Eric Balchunas Suggests Fear is Misplaced
Although Thielen’s report sent the market into a frenzy, there have been suggestions from opposing experts that the document is full of fluff. According to Erich Balchunas of Bloomberg, at least three of the five SEC members are poised to approve Bitcoin spot ETFs. Given this is a majority, the SEC should theoretically be ready to start processing fund applications.
Tack on that Thielen’s report was made with no insider information – and was simply a piece of personal opinion – it seems the crypto market, as it loves to do, overreacted a little. Alternatively, the sea of red over the past 24 hours could just be whale investors consolidating their portfolios before the big news drops over the coming weeks. As litigator Joe Carlasare said on X (formerly Twitter):
Bitcoin didn’t sell off because of some silly report about ETF denial… In short, the market was overbought.
Joe Carlasare As always, bearish trends create buying opportunities. Prominent trader Ran Neuner suggested that investors keep an eye on projects that rebounded quickly from the massacre, as these cryptocurrencies may be gearing up for a bull run in the coming months.
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
