Media Man Australia Blog
Bitcoin reverses ahead of eagerly awaited ETF decision - January 4, 2024
A slump in bitcoin led the cryptocurrency to erase almost all gains it had made so far this year, bucking a long-running upswing that outperformed a global malaise in traditional assets.
The world’s largest token fell as much as 9.2 per cent to dip briefly below $US41,000 shortly after 7am in New York, a day after the digital asset had topped the $US45,000 mark in a 21-month-high. At 10.30am, bitcoin was 6 per cent lower to $US42,458 on bitstamp.net.
The volatility also spilled over into crypto-linked stocks, with shares in the US crypto exchange Coinbase Global falling 6.9 per cent.
“We will likely see some increased volatility in the short term as markets start to measure risk in all asset classes, as we enter a year that has many question marks,” said Fadi Aboualfa, head of research at crypto custodian Copper Technologies. “Regardless, we saw markets tank just the same at the start of December, only to rally up further.”
More than $US500 million in positions across all cryptocurrencies on major exchanges have been liquidated so far on Wednesday, according to data by Coinglass. It is the largest amount of liquidations since December 11.
Bitcoin has been on a tear before the January 10 deadline that could result in the US Securities and Exchange Commission approving the first exchange traded fund tied directly to the asset’s spot price. The cryptocurrency’s value rose almost 160 per cent in 2023, alongside a broader rally in digital-asset fortunes.
Even so, Matrixport analyst Markus Thielen said in a note that he expected the SEC to decline all bitcoin ETF proposals this month. Mr Thielen said recent applications would still fall short of requirements that must be met before the SEC signed off on them.
If the SEC were to reject the proposals, some market watchers predicted issuers may opt to retaliate against the regulator.
Several issuers have recently filed named authorised participants for their potential bitcoin-linked products, a sign that the funds could be nearing approval. Among those named are Wall Street heavyweights Jane Street Capital and JPMorgan, who will be responsible for steering cash in and out of ETFs.
Other assets also fell in tandem with bitcoin, which celebrated its fifteenth year since the mining of its first block on January 3, 2009. Ether declined as much as 11 per cent on Wednesday, while Solana’s SOL tumbled more than 28 per cent.
