Why Did Bitcoin Prices Drop Today? Analysis of the Causes and Impact on the Crypto Market

On Wednesday morning, Bitcoin prices plunged nearly 10 percent to below 41,000 US dollars. This drop coincided with a report from Matrixport, which predicted that the SEC (US Securities and Exchange Commission) would likely reject all Bitcoin ETF applications . However, according to an analyst from K33, the reason why Bitcoin prices fell today is more likely due to the large amount of leverage or loans in the market.

Response from Jihan Wu, Founder of Matrixport

Jihan Wu, founder of Matrixport, revealed that their report was probably not the main trigger for why Bitcoin prices fell today. 

He also highlighted the decline in the value of crypto stocks in recent days, which may have signaled a slowdown in momentum for digital assets.

Analyst View: Leverage as a Key Factor

Analysts rejected Matrixport's contrarian view, stating there was no compelling evidence that the SEC would reject the ETF's application.

Bitcoin briefly recovered from its sharp decline on Wednesday, but is still trading lower.

The Impact of Jim Cramer's Comments

This decline also occurred a day after Jim Cramer, host of CNBC, gave positive comments about Bitcoin. Although the connection is not direct, some observers attribute his comments to the reason why Bitcoin prices fell today.

Market Analysis by K33 Research

K33 Research's Vetle Lunde emphasized that the market is overheated and heavily leveraged, making it vulnerable to a downturn.

High leverage in the market, especially in the form of “long” positions, increases the risk of volatility.

CryptoQuant Report: Other Factors Causing the Drop

CryptoQuant, a digital asset research firm, also attributed the price decline to high funding rates in the Bitcoin futures market, selling pressure from Bitcoin miners, and high levels of profit for short-term holders.

Despite the concerns, many still argue that approval of a Bitcoin ETF in the US is only a matter of time.

Conclusion

The recent decline in Bitcoin prices shows the market's vulnerability to a variety of factors, including high leverage, research reports, and public comments. Despite the uncertainty, the long-term outlook on Bitcoin ETF approval remains positive.

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DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.