Jan 3, 2024 - Economy

Bitcoin gives up New Years surge after ETF fever breaks

Data: CoinGecko; Chart: Axios Visuals
Data: CoinGecko; Chart: Axios Visuals

The price of bitcoin retreated Wednesday from its New Years surge, falling 5% from its recent high.

Why it matters: Gains this week had been driven by expectations that regulatory approval for bitcoin ETFs was imminent, but that hope was downgraded, albeit slightly, by Wednesday.

Catch up fast: The original cryptocurrency's price on Tuesday hit $45,000 for the first time since April 2022.

  • Anticipation that the SEC will soon approve a group of spot-bitcoin exchange traded funds, or ETFs, has helped drive BTC price for months, Axios' Brady Dale noted yesterday.
  • A Reuters report over the weekend helped reignite speculation that a green light could be imminent.

Be smart: ETF approvals would be a big deal for bitcoin.

  • The exchange traded funds would provide direct access to the cryptocurrency from traditional brokerages — and provide a path to an uptick in institutional adoption.

Driving the news: That anticipation was doused with cold water Wednesday. Or at least room temperature water from a small cup.

  • Helping fuel the pullback was crypto investment and financial services platform Matrixport, which issued a prediction that the ETF's won't, in fact, gain approval by the SEC's Jan. 10 decision deadline.
  • Its unsourced analysis was based on the idea that politics would get in the way. The securities regulator's chair, Gary Gensler, is no fan of crypto. And the regulator's voting leadership is dominated by fellow Democrats.

Of note: This idea isn't actually a new one.

Yes, but: ETF fever has hardly fallen away. And there are plenty of other signals supporting bitcoin's price headed into 2024.

  • Even with today's drop, BTC is still up 1.3% over the past 30 days, and 154% over the last year.

💭 Our thought bubble, via Axios' Crystal Kim: It would be quite an upset if ETF issuers were denied again after all the meetings and paperwork.

Go deeper on the ETF situation with Crystal and Brady in today's Axios Crypto newsletter

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