Bitcoin Price Drops Below $45,000 as ETF Anticipation Causes Market Volatility
Bitcoin’s price has fallen below the $45,000 mark as the crypto market awaits news from the Securities and Exchange Commission (SEC) regarding its review of spot ETF applications. The price of Bitcoin, the largest cryptocurrency by market capitalization, has declined by over 4% in the past 24 hours, reaching $44,933. This drop follows a period of high volatility triggered by a security breach of the SEC’s official Twitter account, which falsely announced the approval of a spot Bitcoin ETF. The market experienced a surge to almost $48,000 but quickly plunged back below $45,000 once the agency clarified that the tweet was fake.
Possible Increase in Institutional Flows
The approval of a spot Bitcoin ETF could potentially result in an influx of around $155 billion into BTC market capitalization, according to Bitfinex Head of Derivatives Jag Kooner. This estimation is based on the current total capitalization of Bitcoin funds available in the market. David Bchiri, Founder of XRPL Commons, believes that if spot Bitcoin ETFs are approved by the SEC, it could pave the way for Bitcoin’s integration into the mainstream financial system. This approval could also lead to similar approvals in other jurisdictions globally.
Price Correction Risks Persist
Institutional inflows resulting from potential ETF approvals may reduce volatility in spot markets as new liquidity enters. However, Nansen Principal Research Analyst Aurelie Barthere anticipates a short selling period in Bitcoin following initial approval. This is because traders might take profits after buying on rumors. CryptoQuant analysts also highlight significant price correction risks due to short-term Bitcoin holders selling their coins.
Hot Take: The Road to Mainstream Acceptance
The approval of spot Bitcoin ETFs by the SEC could mark a significant milestone in Bitcoin’s journey towards mainstream acceptance. It has the potential to attract institutional investors and provide more cautious investors and advisors with an opportunity to engage with cryptocurrencies. While volatility and price correction risks persist, the integration of Bitcoin into traditional finance systems could have long-term positive effects on its market dynamics.
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