On January 3rd, Bitcoin (BTC), the leading cryptocurrency by market capitalization, experienced a sharp 10% decline during intraday trading. The drop followed the release of a report by Matrixport, a crypto investment services provider.

The report, authored by analyst Markus Thielen, suggested that the U.S. Securities and Exchange Commission (SEC) might reject all pending applications for a spot Bitcoin exchange-traded fund (ETF) in the coming month. Despite ongoing meetings between applicants and the regulator, as well as updated S-1 prospectuses, Thielen pointed out a critical requirement that, in his view, remained unmet for SEC approval.

Citing the current political climate and the SEC's cautious stance on crypto, Thielen emphasized that the proposed ETFs fell short of meeting necessary criteria. He noted that SEC Chair Gary Gensler's December 2023 comments indicated a belief in the industry requiring more stringent compliance, making the approval of a Bitcoin Spot ETF unlikely from a political perspective.
Thielen's report triggered a significant double-digit decline in BTC's value and led to the liquidation of $500 million worth of positions across derivatives exchanges within a single day.