Bitcoin dives 7% amid report of possible ETF denial

By Ovunc Kutlu

ISTANBUL (AA) – Bitcoin saw its price plummeting around 7% on Wednesday, a day after surpassing the $45,000 threshold, amid a report that US regulators may reject spot Bitcoin exchange-traded funds (ETFs) this month.

The world's biggest cryptocurrency's price was trading around $42,248 at 9.53 a.m. EDT for a 6.9% daily loss after climbing Tuesday to its highest level since April 2022.

While some altcoins dove as much as 17%, total value of the cryptocurrency market was down 7.5% to $1.61 trillion at the time, according to data from CoinMarketCap, a digital asset price-tracking website.

The recent rally in the crypto market was the result of optimism that spot Bitcoin ETFs would get regulatory approval in the US by the Securities and Exchange Commission (SEC) in early 2024, but now this is in doubt, according to a report.

"The current five-person voting Commissioners leadership critical for the ETF approval of the SEC is dominated by Democrats," said the report by Matrixport, a financial services providing firm. "From a political perspective, there is no reason to approve a Bitcoin Spot ETF that would legitimize Bitcoin as an alternative store of value.

"SEC Chair Gensler is not embracing crypto in the US, and it might even be a very long shot to expect that he would vote to approve Bitcoin Spot ETFs," said the report. "An ETF would certainly enable crypto overall to take off, and based on Gensler’s comments in December 2023, he still sees this industry in need of more stringent compliance."

Some analysts, on the other hand, believe that the reason behind the sudden price decline in Bitcoin and cryptocurrencies was a pullback in the bull market, noting that the crypto market is highly volatile.