On Wednesday evening, Beijing time, alternative asset investors who were waiting for the approval of the US SEC were greeted by another shocking plunge in the cryptocurrency market. As of press time,Bitcoin fell from a position of $45,000 to below the integer mark of $42,000, and then entered a state of sideways fluctuations.


(Bitcoin minute chart, source: TradingView)

According to data from the cryptocurrency data platform Coinglass, during the most intense hour of today's dive, more than $400 million in positions were exploded on major exchanges, highly concentrated in the long direction.


(Source: Coinglass)

Of course, these people are long cryptocurrencies, primarily betting onU.S. securities regulators approved a Bitcoin spot ETF, making it easier to attract incremental funds to push up asset values. As BlackRock, the “global ETF leader”, joins the ranks of applying for spot Bitcoin funds, the currency circle has been gearing up for this for a long time.

For reference,When BlackRock first submitted its proposal to establish a Bitcoin spot ETF in June last year, the price of Bitcoin was around US$25,000. In the next six months, it reached US$40,000. Therefore, there is no doubt that there are many positions that are still profitable and choose to "take it easy" in today's shock.


(Bitcoin daily chart, source: TradingView)

The logic of speculation based on regulatory approvals also appears particularly fragile when faced with adverse news related to regulation. The reason why Bitcoin plummeted today pointed to a research report that asserted that "the SEC will not issue approval in January."

A research report sparks sell-off

Cryptocurrency investment service provider Matrixport mentioned in a report released on Wednesday that the current five-member SEC committee is dominated by Democrats, and SEC Chairman Gensler is not the kind of person to "embrace cryptocurrency." According to his interview last December, he still believesThe currency circle needs stricter compliance. From a political perspective,There is currently no reason for the U.S. government to approve a Bitcoin spot ETF, making Bitcoin a legitimate store of value.

Compared with this logical deduction, this paragraph may be more lethal to ultra-short-term investors: Matrixport estimates that since September last year,Approximately $14 billion in incremental funds (including cash and leverage) have poured into the cryptocurrency market, of which approximately $10 billion is expected to bet on the SEC's approval.

Matrixport said that if the SEC makes any negative decision, the Bitcoin derivatives market may see a chain liquidation.In the short term, there will soon be a 20% decline, falling back to the range of US$36,000-38,000.

What needs to be emphasized is that this report, which caused some investors to "run first", also included a long-term view of Bitcoin. Although Matrixport believes that even if all Bitcoin spot ETF applicants do not currently meet the SEC’s requirements,They may still meet regulatory requirements in the second quarter of this year. At the same time, Matrixport also predicts that by the end of this year, the price of Bitcoin will be higher than at the beginning of the year ($42,000).

Because of this expectation, although Wednesday's decline was relatively large, from the perspective of the daily chart, it only gave back the positive line in the first two days of this year. As for the reason for the sharp rise in the past two days, it was reported by the media last week that:The U.S. SEC will notify various ETF issuers of the approval "on Tuesday or Wednesday of this week" at the earliest, so that everyone may be ready to list them together on January 10.

Therefore, for cryptocurrency investors, they still have to wait for what decision the SEC will make today, this Friday (SEC is off work), and before the theoretical "statement deadline" of January 10.