Key Reason Why Bitcoin (BTC) Price Just Collapsed

Bitcoin experienced a significant drop today, with its value plunging to an intraday low of $41,454 on the Bitstamp exchange. 

Market analysts attribute this sudden decline to speculations about the Securities and Exchange Commission (SEC) potentially rejecting several Bitcoin ETF proposals this month.

As reported by U.Today, Markus Thielen, an analyst at Matrixport, believes that recent applications might not meet the stringent criteria required for the SEC's much-coveted nod.

The widely expected listing of prominent Wall Street firms such as JPMorgan as authorized participants for potential Bitcoin-linked ETFs had fueled optimism for imminent approval. However, the looming possibility of a rejection has cast a shadow over these expectations.

Major price collapse on Bitcoin's birthday

The cryptocurrency market mirrored Bitcoin's downturn, with other major digital assets like Ether and Solana experiencing double-digit drops.

This collective slump occurs as Bitcoin commemorates 15 years since the mining of its genesis block. Despite previous bullish predictions from financial analysts, the market's response has been predominantly bearish. 

Interestingly, Matrixport had earlier forecasted a surge in Bitcoin's price to $50,000, contingent on the approval of a Bitcoin Spot ETF. This optimism was grounded in the belief that ETF approval would legitimize Bitcoin in institutional portfolios and potentially lead to substantial fiat inflows.

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With that being said, analyst Eric Balchunas remains optimistic about the odds of a spot Bitcoin ETF being approved this month, questioning Matrixport's sources. "We have heard nothing to indicate anything but approval but I want to give the guy benefit of doubt so I’m asking if he has any sources or if he just speculating," he posted on X.

Contrasting views

Some market participants attribute the price collapse to the rumored ETF rejections, but some other analysts, like Joe Carlasare, offer a different viewpoint.

Carlasare argues that the sell-off is a natural market correction, labeling the situation as an "overbought market" undergoing a "long squeeze."

The recent liquidation data from CoinGlass supports this argument. In the last 24 hours, approximately 190,619 traders were liquidated, with total liquidations amounting to an astounding $657.23 million. 

The largest single liquidation order, valued at $14.26 million, was reported on Huobi.