BTC plummets by $5,000 in the short term, is the spot ETF plan expected to fail?

According to the OKX market, at 18:00 this evening, the price of BTC began to fall from 45,400 USDT, and then fell by more than 5,000 US dollars in just three hours, falling as low as 40,157 USDT. However, as of press time, the BTC price has rebounded to 42,400 USDT, a 24-hour drop of 7%.

Market Review

Due to the recent strong market expectations for the adoption of the Bitcoin spot ETF, Bitcoin experienced a rapid rise at the beginning of the year. On January 1, the price of Bitcoin rose from 42314 USDT to 44230 USDT, a single-day increase of 4.86%. Then, it rose again by 3.95% on January 2, reaching the highest price of 45,950 USDT, setting a new high in this round of market. However, Bitcoin prices fell today, returning to the consolidation range in December and recording the largest single-day swing since October.

Over the past week, with the exception of BNB, the top ten tokens by market capitalization have performed poorly relative to Bitcoin. BNB is the only coin that has gained 1.2% in the past seven days, while other coins have declined. Among them, the largest decline was AVAX, which fell by 16.6%, followed by SOL, which fell by 12%.

In addition, the top 40 tokens by market value in the past week are still positive: ICP (62.2%), ARB (36.4%), LDO (23.2%), FIL (16.5%), OP (2 %), LEO (1.4%), BNB (1.2%), TRX (0.3%).

Affected by the downward trend of the overall market, the total market value of cryptocurrency has now dropped to 1.7008 billion U.S. dollars, a 24-hour decline of 7.3%. The overall trading enthusiasm of cryptocurrency users remains at the stage of continued greed. Today's Panic and Greed Index is 70 (little changed from last week's average of 73), showing that the degree of greed is relatively stable. Overall market sentiment remains biased towards greed.

According to Coinglass data, the liquidation amount of the entire network in the last 24 hours reached US$636 million, including US$148 million of BTC liquidation and US$108 million of ETH liquidation. A total of 182,462 people suffered liquidation losses.

Global Bitcoin (BTC) contract positions are US$18.354 billion, down 7.71% from the past 24 hours. Among these contracts, CME Group has the highest holdings at $5.362 billion, while Bitcoin Arrangement ranks second with $3.947 billion. In addition, global Ethereum (ETH) contract positions were US$7.365 billion, a decrease of 8.43%.

The discount rate of Grayscale products has increased compared with last week. The discount rate of GBTC's net asset value is currently -8.1%. The discount rates of other Grayscale mainstream currency trusts are as follows: ETH (-11.76%) and ETC ( -35.31%); there are 11 products with positive premiums, namely FIL (724%), BAT (269%), LINK (322%), MANA (231%), XLM (182%), SOL (281%) , BCH (106%), LTC (169%), LPT (94%), ZEN (98%), ZEC (12.2%).

Encryption-related listed companies have seen mixed gains and losses recently. Among them, the share price of Coinbase (NASDAQ: COIN), a US-compliant encryption platform, rose 9.8% yesterday and was temporarily reported at US$156.88; the share price of MicroStrategy (NASDAQ: MSTR), a listed company with the largest Bitcoin holdings, rose 8.48% yesterday and was temporarily reported at US$685.15.

The market has mixed opinions on whether the Bitcoin spot ETF will be approved

Various institutions and analysts have different opinions on whether the Bitcoin spot ETF can be approved in January.

Matrixport: Bitcoin spot ETF will not be approved in January

At 19:00 today, Matrixport released a report, which believes that all current spot Bitcoin ETF applications have failed to meet a key requirement. The SEC is therefore expected to reject all proposals in January, which could happen in the second quarter of 2024.

Additionally, the report states that since traders began betting on ETF approval in September 2023, at least $14 billion in additional fiat currency and leverage has been deployed into the cryptocurrency space. Some of these flows may be related to easing macro conditions as the Fed turns dovish. However, of the $14 billion in additional long positions, $10 billion may be related to expectations of ETF approval.

Matrixport said that if the SEC refuses to approve the ETF, there will be a large-scale liquidation in the market. It is expected that most of the US$5.1 billion long positions will be liquidated, and the price of Bitcoin may quickly fall by 20% and fall back to $36,000/$38,000 range. Even so, Matrix on Target still predicts that even if the SEC vetoes the ETF, the price of Bitcoin will still be higher than the $42,000 at the beginning of the year by the end of 2024.

Bloomberg ETF Analyst: The probability of passing is about 90%

This morning, Bloomberg ETF analyst Eric Balchunas said that although he and ETF analyst James Seyffart still believe that the Bitcoin spot ETF is in The chance of approval before January 10th is 90%, but they haven't raised the possibility beyond that number.

Eric Balchunas further stated that although it is very unlikely, the rejection of the spot Bitcoin ETF this month is likely because the SEC wants "more time" rather than a direct rejection. Because the time and effort invested by the SEC and Bitcoin ETF issuers means that a Bitcoin ETF is unlikely to be rejected outright at the last minute. If the SEC refuses, fund issuers may follow Grayscale's lead and file separate lawsuits against regulators.

Prediction market: The probability of passing is about 89%

According to Odaily’s report yesterday, the prediction betting market Polymarket data showed that the platform contract price of “SEC passes Bitcoin ETF before January 15th” is 0.89 cents. , meaning traders believe the probability of passing is 89%, compared with 50% last month.

Summary

Bitcoin rose sharply on January 1st and 2nd. Some market participants believed that insiders learned in advance that the ETF would be approved. However, after today’s decline, Expectations that cannot be passed begin to brew again. Whether it will ultimately pass is still unclear, but market volatility will increase as the event approaches, and Odaily reminds investors to pay attention to leverage risks.

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