Bitcoin's Drop To $40K Spurs $671M In Long Liquidations, Heightens Market Volatility

After surging above the $45,000 price level Tuesday, Bitcoin, the world's oldest and largest crypto asset by market capitalization, plummeted and briefly traded at around $40,000 Wednesday morning, triggering the day's current long liquidations to $671 million.

While the hype surrounding the spot Bitcoin exchange-traded fund (ETF) swells as the deadline for the U.S. Securities and Exchange Commission (SEC) inches closer, Bitcoin's value surged to new heights earlier this week, trading above the $45,000 price level, marking the first time in 21 months.

However, the value of the king of crypto briefly dipped on Wednesday morning, recording a 10.30% loss, erasing the gains it had accumulated the day prior.

Data from the cryptocurrency derivative data analysis platform CoinGlass showed that the day's current long liquidations are at $671.66 million, with the largest single liquidation order taking place on the Huobi exchange, amounting to around $14.26 million.

"In the past 24 hours, 198,075 traders were liquidated, and the total liquidations amount to $671.66 million. The largest single liquidation order happened on Huobi - BTC-USDT value of $14.26M," Coinglass said.

Some speculate that the sudden dip in the price of Bitcoin could be due to panic over the report suggesting the U.S. Securities and Exchange Commission (SEC) will reject spot Bitcoin ETF applications.

The report, from the crypto financial services platform Matrixport, suggests that the major Wall Street regulator will not approve the spot Bitcoin ETF proposals submitted by hopeful issuers.

"The current five-person voting Commissioners leadership critical for the ETF approval of the SEC is dominated by Democrats," Matrixport said. "SEC Chair Gensler is not embracing crypto in the US, and it might even be a very long shot to expect that he would vote to approve Bitcoin Spot ETFs. An ETF would certainly enable crypto overall to take off, and based on Gensler's comments in December 2023, he still sees this industry in need of more stringent compliance. From a political perspective, there is no reason to approve a Bitcoin Spot ETF that would legitimize Bitcoin as an alternative store of value."

Bitcoin was trading in the red zone at $42,869.98, with a 24-hour trading volume up by 15.33% at $45.31 billion as of 1:31 p.m. ET on Wednesday.

Bitcoin's latest price action represents a 4.82% dip in its value for the day and a 0.33% gain over the past seven days.

Data from CoinMarketCap shows that Bitcoin's current circulating supply stands at 19.59 million BTC, and its market capitalization is at $840.36 billion.