Bitcoin Slumps as $400M Liquidated in Two Hours

Bitcoin slid 8% on Wednesday as jitters around the anticipated approval of a spot bitcon (BTC) ETF began to enter the market.

The slump retraced the entire upside move that occurred on Jan. 1, spurring the liquidation of $500 million worth of positions across derivatives exchanges.

"The likelihood of the ETF's passage became less and less likely, and the market saw a stalemate," options analyst GreeksLive wrote on X. "Weakness in crypto mining stocks, and the sell-off in several crypto-related U.S. stocks, also reinforced the market's skepticism."

Last week, Retuers reported that a bitcoin ETF could be approved as soon as "Tuesday or Wednesday," citing sources.

Financial services firm Matrixport rebuffed optimistic expectations, saying: "We believe all applications fall short of a critical requirement that must be met before the SEC approves. This might be fulfilled by Q2 2024, but we expect the SEC to reject all proposals in January."

Following a morning high of $45,500, bitcoin dropped to as low as $40,550 before bouncing back to $42,200. Open interest fell by $2 billion due to liquidations, the dwindling value of BTC and traders reducing exposure on both the long and short side.