Bitcoin pulled back on Wednesday, erasing almost all its gains logged in the first two days of the year, ahead of a major deadline by which the U.S. Securities and Exchange Commission will decide on whether it will approve exchange traded funds that invest directly in bitcoin.
The crypto BTCUSD, -0.40% fell 5.7% over the past 24 hours to as low as $40,838 on Tuesday, after a rally on Tuesday sent it above $45,000 to the highest level since April 2022, according to CoinDesk data. Bitcoin rallied over 150% in 2023, but the crypto is still over 35% lower from its peak in 2021.
Crypto market participants in general expect the SEC to approve a spot bitcoin ETF by Jan. 10, by which the agency has to decide whether to approve the application filed by ARK Investment and 21 Shares.
Still, some hold different views. Markus Thielen, analyst at Matrixport, wrote in a Tuesday note that he expects the SEC to decline all bitcoin ETF applications this month, as the applications may fall short of requirements that must be met.
Some blamed the report for triggering bitcoin’s price decline on Wednesday. “Given the market was positioned bullish with leverage, any rumour would trigger a leverage cascade,” Gautam Chhugani and Mahika Sapra, analysts at Alliance Bernstein wrote on Wednesday.