- Media amplification of the ETF rejection report caused the sell-offs, not the report itself.
- Analysts noted that timely approval of the Bitcoin ETF is within reach.
The cryptocurrency market experienced one of its darkest hours on January 3 when the price of bitcoin [BTC] fell below $42,000. The crash came so quickly amid rumors that all Bitcoin ETF applications were rejected.
The details
In a report published by Matrixport, the digital asset company opined that the applications did not meet the desired requirements. He also mentioned that SEC Chairman Gary Gensler's hesitancy to embrace cryptocurrencies could play a role in the pushback.
However, AMBCrypto research showed that Matrixport was not the main reason for the price reaction.
This was because the article was an opinion and Matrixport did not have the โinfluenceโ to bomb the market. In addition, there were publications explaining how the company's CEO, Jihan Wu, had no credibility for ETF-related matters.
Crypto investor and analyst Scott Melker shared a similar opinion in his post on the same day.
He @realMatrixport The report is not โfake newsโ as many claim. He is an analyst giving an opinion. We all do it daily.
We are mostly wrong.
Went viral.
They are allowed their opinion.
They couldn't know that their research report would shake up the market.
- The wolf of all the streets (@scottmelker) January 3, 2024
Once again, misinformation triggers the market
According to AMBCrypto's findings, the report became fake news because a major publication amplified it. Then, the participants panicked and began to take drastic measures while causing more than 500 million dollars in liquidation.
This incident was similar to the one that occurred in October 2023. At that time, another major publication published that BlackRock received the go-ahead to launch its ETF. As a result, the price of Bitcoin jumped from $27,000 to $30,000 in the blink of an eye.
Moments later, the publication apologized for โmisleadingโ the market. The apology then sent BTC back to $28,000. But amidst all that, traders with open contracts felt the pressure as $85 million was wiped out.
During that time, Michael O'Rourke, chief market strategist at JonesTrading saying that:
"Fake news about the approval of the Bitcoin ETF highlights the challenge of protecting investors in an unregulated space that attracts shady traders and rampant speculation."
Being an extremely volatile market, fake news poses a serious threat to players genuinely concerned about the development of the industry. However, it is also important to mention that not all the blame should be placed on publications that spread misinformation.
The decision is closer and could be positive
Regarding the latest episode, people familiar with the matter have clarified the development. For example, Fox Business reporter Eleanor Terret, aware that proceedings related to Bitcoin ETFs were approaching the final stages.
The update provided on January 3 said:
โWhile the final decision has not been made, sources close to the procedure say that the SEC could begin notifying issuers of the approval on Friday and that operations will begin next week. โBoth analysts and ETF issuers remain confident that the SEC will make a favorable decision on or before January 10, as the SEC continues to meet with key players on the matter.โ
At the time of this publication, the price of Bitcoin had recovered, changing hands at $43,129. If the SEC makes a positive statement on ETFs before the above date, players are optimistic that BTC will surpass $50,000.
One of those planning the walk is Christopher Inks.
Inks is a trader and prides himself on being an expert in market psychology. According to him, Bitcoin could break out and reach $53,267 in a short period.
As mentioned in the program with @scottmelker This morning we are seeing a good rebound after this morning's item. The H4 candle closed above the hourly pivot. The day to day looks even better. A breakout to the upside should see a target of ~53267, at least, on this chart. #Bitcoin $BTC pic.twitter.com/ykocFr3Ueo
โ Christopher Inks (market psychology trader/trainer) (@TXWestCapital) January 3, 2024
At the same time, the emerging reports were not confirmation that the SEC would not reject the applications.
Meanwhile, on-chain data presented that BTC trading volume reached an incredible height. At press time, the volume was 47.38 billion dollars.
The increase in volume was a sign that the drop was filling up very quickly. Like volume, Bitcoin's weighted sentiment rose to 2.19.
Source: Sentiment
Weighted sentiment shows the unique social volume or comments linked to a project. So, the positive reading suggests that the broader market has its eyes on a potential ETF approval in the coming days.
Who blushes at the end?
The metrics implied that players have moved on from fake news and are now standing firm based on personal feelings. However, both long and short positions are at risk of liquidation, as the liquidation heat map shows.
The liquidation heat map predicts the price levels at which large-scale liquidation events may take place. According to AMBCrypto's analysis of the HyblockCapital indicator, short positions with targets between $40,750 and $41,250 could be liquidated.
Additionally, those with open positions who believe Bitcoin would fall to $36,000 could be hit by a rally. For long positions, there was a liquidity pool of around $47,100. Therefore, traders may need to be cautious around that level.
Source: HyblockCapital
In conclusion, recent events have shown that cryptocurrencies remain vulnerable to inaccurate information.
Despite Jihan Wu clarification As their analysis was not aimed at collapsing prices, crypto media must take responsibility for not engaging in this intentional or unintentional misrepresentation.
Read Bitcoin price prediction 2023-2024
However, the January 3 tremor is unlikely to influence the SEC's decision on Bitcoin spot ETFs.
Although he route seems promising for approval, it is important to wait until the regulator itself confirms its position.
