The crypto market marked the first-ever crash of 2024. There are talks that a decline could be on the way. This came to light after Matrixport published a research blog post stating the possibility that the SEC could delay or reject Spot Bitcoin ETF applications. The blog ended up wiping out almost $600 million in liquidation.
Long positions have lost $520 million, while short positions have lost $30 million. The crash was initially reported on January 3, 2024.
That has dropped the price of BTC from ~$45k to ~$42k. Markus Thielen, Matrixport’s Head of Research, wrote the blog post. According to the post, all applications filed with the US Securities and Exchange Commission were lacking a critical element, potentially delaying the applications until the second quarter of this year.
This speculation has resulted in a staggering loss of funds in liquidation. Markus’s research is predicated on the supposition that the Commission Chair, Gary Gensler, has not yet adopted cryptocurrency. Furthermore, Democrats dominate the 5-person voting commissioner leadership. The leadership determines the direction of Bitcoin ETF applications.
BTC is currently exchanging hands at $42,997.39, a fall of 5.09% in the last 24 hours. The value is poised to slip more and touch the market of $36,000–$38,000. There is, alternatively, a scenario where Bitcoin is being traded at $30,000 and as low as $24,800 in the days to come.
Relief comes from what the 365-day MVRV ratio is reflecting at the moment. Short for market value to realized value, the MVRV ratio denotes how many investors have made a profit over the last year. The number is 33.15%, the same number of investors who purchased BTC in the last year. Another crash could be caused if these investors, or a portion of them, decide to book profit at the moment.
The current crash could be a start for crypto, adding worries to the factor of volatility, which drives away novice crypto enthusiasts.
Another dominant token that has taken a hit is Ethereum. Its value is down by 6.46% in the last 24 hours, currently exchanging hands at $2,223.23. All sights are on Bitcoin, for it is vulnerable to re-creating the scenario of the 2019 mini-cycle.
The estimated leverage ratio has declined from 0.23 to 0.17. There is a 50% reduction in leverage due to the crypto market crash.
The SEC has yet to comment on the theory put forward by Matrixport’s Markus. One still cannot ignore the possibility that the SEC may reject all applications or delay them until the second quarter. It will hurt the price further, but BTC will attempt to make corrections through its halving process, which is scheduled to happen in the middle of this year.