Bitcoin price is down today as traders begin to realize profits ahead of the long-awaited spot ETF decision.
Despite the United States economy adding many more jobs than anticipated in a Jan. 5 report, the bullish momentum that propelled Bitcoin
BTC $43,707 over $45,000 in 2023 seems to be waning this week. Bitcoin traders’ mentions of “buying the dip” have increased, but those efforts seem to be landing flat even with traditional markets gaining on positive economic news.
The contraction in Bitcoin price has not worried all analysts, with some believing BTC can surpass $46,000 before a spot ETF approval.
Let’s take a closer look at the factors impacting Bitcoin price today.
All eyes are on a spot Bitcoin ETF approval
Bitcoin’s price drop comes on the heels of substantial rumors regarding both the timing and potential approval of a spot BTC ETF.
On Jan. 3, a financial firm posted an unsubstantiated rumor that a spot Bitcoin ETF denial was eminent. The report coincided with a sharp 8% flash crash in Bitcoin price.
Only 39% of financial advisers believe a spot Bitcoin ETF will be approved in 2024. A resounding amount believe U.S. regulators rejecting a round of spot exchange-traded fund (ETF) applications, to buy the SEC more time.
Despite advisers’ expectation of a spot Bitcoin ETF rejection, the crypto space buzzed with rumors that the SEC would decide on Jan. 5. When the approval did not arrive as expected, Bitcoin price dropped and new rumors began to emerge.
NEW re $BTC spot ETFs: Expecting some amended 19b-4 filings today as well as some eleventh hour phone calls concerning comments on S-1s and possible launch dates. The timeline for approvals still looking like next week but will all depend on how fast the @SECGov can read…— Eleanor Terrett (@EleanorTerrett) January 5, 2024
Bitcoin long liquidations ramp up
A sharp movement in the Bitcoin futures market appears to have been a reason for the swiftness of today’s price decline. The timing of the long liquidations coincided with when rumors predicted an answer on the spot Bitcoin ETF. Bitcoin long liquidations quickly spiked $2.1 million in a 5-minute span on Jan. 5.
When BTC longs are liquidated without buying pressure from traders, Bitcoin price is negatively affected. Bitcoin trading volumes dropped over $6 billion from the Jan. 3 peak.
The absence of consistent liquidity and trading volume has led some analysts to debate whether the current Bitcoin price rally has staying power.
The futures market indicates that traders also believe a pullback is coming with over 54% remaining short Bitcoin.
A record number of BTC wallets are in profit
Despite the Bitcoin price drawback on Jan. 5, a record high 46.5 million BTC wallets are currently in profit.
With a record number of wallets in profit, traders seem to be de-risking and profit-taking hit a 3-month high on Jan. 4. The decline in trading volume combined with the high amount of investors realizing profit may lead to Bitcoin price continuing to fall.
To date, Bitcoin price continues to be directly impacted by macroeconomic events, and it is also likely that further regulatory actions, ETF news and the Federal Reserve’s monetary policy will continue having some effect on BTC price.
In the long term, market participants still expect the price of Bitcoin to recover, especially as more financial institutions are seemingly embracing BTC.
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