Major cryptocurrencies took a nosedive on Wednesday evening amid concerns about the possible approval of a spot Bitcoin ETF.

What Happened: Data from Coinglass shows that in the past 24 hours, over $600 million worth of cryptocurrency longs, (which are bets on higher prices with borrowed money) were liquidated.

Bitcoin experienced a rapid drop from approximately $45,000 to a low of $40,000 early on Wednesday. The decline coincided with the release of a report by Markus Thielen, published by Singapore-based digital asset firm Matrixport, predicting that the Securities and Exchange Commission (SEC) would reject all spot bitcoin ETF applications. 

This contradicted the firm’s previous outlook just a day earlier, which had anticipated an imminent approval and a BTC surge to $50,000.

Jihan Wu, co-founder of Matrixport, downplayed the report’s role in the market downturn and said the recent weakness in cryptocurrency-related stocks as a potential indicator of waning momentum for digital assets.

“It’s unrealistic to believe that a Matrixport report could trigger a trillion-dollar size market to crash,” Wu posted on X Wednesday. “We also experienced an unexpected drop in crypto stocks for consecutive trading days, while Bitcoin’s price remained stable.”

The sudden drop occurred just one day after CNBC host and former hedge fund manager Jim Cramer made favorable remarks about Bitcoin, retracting his previous negative stance from October.

Top Gainer (24 Hour)

The global crypto market cap has reached $1.73 trillion, marking a 1.23% decrease in the last 24 hours.

The Nasdaq Composite index closed at 14,592.21, marking a 1.18% decrease and continuing its trend of four consecutive losing days. The S&P 500 ended at 4,704.81 with a 0.80% slip.

Investors seemed to be selling off last year’s tech winners, which had soared in anticipation of easing monetary policy in 2024. However, with uncertainty surrounding the timing of the Federal Reserve’s rate cuts, investors appeared to have tempered their enthusiasm.

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Analyst Notes: Cryptocurrency analyst Michael Van de Poppe referred to the launch of the Bitcoin Spot ETF as a highly significant event in the history of Bitcoin.

“The second time in a row the markets react from an ‘intern’ posting unconfirmed information. That’s how easy to manipulate the markets are.  Buy the dips and be patient.”

Van de Poppe in a separate tweet on X added, “Not much has happened, despite a liquidation on altcoins. Bitcoin still stuck in a range.  Personal interest to buy into it at $36-39K and interest to sell at $48-51K. These areas are likely going to be the areas for Bitcoin for a substantial period of time.”

Pseudonymous cryptocurrency analyst Crypto Tony said, “quite simply, we hold $41,000 and we pump to new highs towards $47,000.”

According to Santiment, a company specializing in on-chain analytics, the crypto markets have experienced a decrease, causing a divide among traders. Bitcoin’s decline to $42.2K has contributed to today’s highest BTC trading volume level since March 17th, with the possibility of daily trading surpassing year highs in the next couple of hours.

Photo by FellowNeko on Shutterstock

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