Market Wobbles on Possible Rejection of Spot ETF, "Approval Within January"
Cryptocurrency prices plummeted overnight on news that the approval of a Bitcoin spot exchange-traded fund (ETF) could be rejected. At one point, the decline exceeded 10%.
According to CoinMarketCap on the 4th, Bitcoin was trading at 55.99 million KRW as of 7:36 AM, down 4.97% from the previous day. Compared to seven days ago, it was down 1.74%. This means it has given back all the gains made since the beginning of the year. Altcoins such as Ethereum and Solana also fell along with Bitcoin.
Between 8:50 PM and 9:00 PM Korean time, selling pressure intensified within 10 minutes. Prices slightly rebounded around 9:25 PM. At one point during the session, the $40,000 level (52 million KRW) was threatened. As sell orders poured in, trading volume surged. The trading volume over the past 24 hours exceeded 60 trillion KRW, an increase of more than 15% compared to the previous trading day. Global liquidity is a key factor influencing Bitcoin prices.
Market expectations were that the U.S. Securities and Exchange Commission (SEC) would approve the first Bitcoin spot ETF in January this year. This is because a final response is due this month on BlackRock Asset Management's Bitcoin spot ETF application. The news that major investment bank JP Morgan would join BlackRock as an authorized participant (AP) for the ETF also acted as a positive factor. Currently, 12 entities have submitted applications to the SEC for spot ETF listing approval. There was growing anticipation that institutional funds could flow in upon ETF listing, expanding the market.
However, on the 3rd (U.S. time), speculation arose that the SEC might reject the spot ETF approval, putting a brake on the rally that had continued since the end of last year. Markus Thielen, Chief Strategy Officer at cryptocurrency service provider Matrixport, stated in a report that day, "SEC Chairman Gensler is not embracing cryptocurrencies, and expecting him to approve a spot ETF could be very difficult."
He added, "Approval might come in the second quarter, but we expect the SEC to reject all (spot ETF) applications in January." He also forecasted, "If the SEC rejects approval, Bitcoin prices could crash," and "Bitcoin prices could drop sharply by 20%, falling back to $36,000 to $38,000."
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