Why is the crypto market down today?
On January 3, the crypto market was down as Bitcoin (BTC), Ether (ETH) and altcoins hit a major correction. Bitcoin fell 10%, erasing all 2024 gains, before rallying to trade around $42,700.
Let's take a closer look at the factors influencing the price of Bitcoin today.
Questionable position Bitcoin ETF report disrupts the market
Investors' belief that the United States Securities and Exchange Commission (SEC) could approve one of 14 landmark Bitcoin ETF applications in early January sent BTC over $45,000.
On January 3, a report was released by the financial services forum that the SEC plans to reject the position of Bitcoin ETFs. Within an hour of the report's release, the price of the crypto plummeted.
$BTC price down ~10% in short term #Matrixport predicts #SEC rejection of Bitcoin Spot ETFs after recent research #Coinglass data shows long order worth $14.26M lost on #Huobi . pic.twitter.com/Es7X0Y5MAE
— Lookonchain (@lookonchain) January 3, 2024
While some analysts don't believe the report is the cause of the crypto market decline, citing technical price metrics, the timing has raised eyebrows.
The cryptocurrency industry and regulators have a long history of not getting along due to various misconceptions or mistrust of the proper use of digital assets. Such history has led analysts to believe that spot Bitcoin ETF applications will be rejected to buy more time for the SEC to make a final decision.
Future liquidity has increased on the crypto market.
The decline in major cryptocurrencies has led to rapid liquidity in the primary market. Regardless of whether the report caused the crash, bullish traders were caught off guard, leading to a long period of rapid outflows.
Related: Cory Clipston warns ‘shitcoin traders' in bull market: X Hall of Flame
In the last 24 hours, more than $577.7 million in long positions have been exited across the crypto market. Crypto market prices are adversely affected when long-term rival positions are depleted without buying pressure from trading volume.
Over 196,848 traders moved $14.26 million worth of BTC and Tether (USDT), the largest single liquid.
Related: 15 Years, 90K ‘Bitcoinaires' — Bitcoin Millionaire Wallets Jump 300%
Although traders maintained their positive sentiment, the broadest index declined from last month.
The sharp decline is a reminder that volatility can return to the market at any time.
Didn't you have fun?
I love the volatility of the bull market. pic.twitter.com/OHbHfUmlzD
— Arthur Hayes (@CryptoHayes) January 3, 2024
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
