Mainstream Media Causes FUD Once Again As Market Dips

The crypto currency market is often fuelled by media and it can be regularly impacted by positive and negative news that at times doesn’t have to be right. Many times fake news articles have been circulated and even reported on and it has caused the market to dip.

Bitcoin has probably had the most negative news published about it over time with every market down turn causing media outlets to publish content that states Bitcoin is dead. However, it is often wrong and Bitcoin returns as people continue to invest in it.

Crypto currency markets experienced a significant setback recently with a staggering USD 110 billion wiped off the total market cap however, the sector continues to be at a relatively healthy position with a total valuation of USD 1.65 Trillion at the time of writing.

The catalyst behind this unexpected plunge was the looming negative news surrounding the approval of Bitcoin spot ETFs by the U.S. Securities and Exchange Commission (SEC).

This fear driven market reaction led to a cascade of events including a sharp decline in Bitcoin prices and a widespread sell off across various crypto currencies.

Market Reacts Like Dominos

The downturn in the crypto market was largely triggered by a report from Markus Theilen, the head of research at Matrixport who suggested that the SEC is likely to reject all spot BTC ETF applications in January. The report highlighted the perceived shortcomings in the applications and the political climate at the SEC, emphasizing the dominance of Democrats in the commission's leadership.

The Matrixport report fuelled FUD (fear, uncertainty, and doubt) by causing a rapid sell-off in the market. The fear of rejection prompted investors to liquidate their positions and resulting in over USD 1 billion in open interest for Bitcoin being wiped out in a single candlestick.

While the market was gripped by fear, Bloomberg Intelligence senior ETF analyst Eric Balchunas maintained a positive outlook giving the odds of approval at 90%.

Balchunas questioned the basis of the rejection speculation pointing out that multiple mainstream news reporters with inside sources have suggested approval is likely. He expressed skepticism about the rejection scenario, considering the extensive efforts put into the ETF approval process.

Rejection Impact

The repercussions of a potential rejection of the ETF applications extend beyond market volatility. Balchunas warned of potential lawsuits similar to the one filed by Grayscale against the SEC in case of rejection. The rejection could undermine the substantial efforts and resources invested in securing approval, leading to continued legal battles and heightened market turmoil.

Market Sell Off From Fear

The market sell-off extended beyond Bitcoin, affecting major crypto currencies such as Ethereum, Solana, XRP, and Cardano. Over USD 600 million was liquidated in the last 24 hours with long positions worth over USD 561 million liquidated. The sudden sell-off highlighted the crypto market's inherent volatility and its susceptibility to popular narratives.

Options trading analysts from Greekslive suggested that an SEC decision on spot Bitcoin ETFs is unlikely before January 7. They pointed to January 10 and beyond as a potential timeline for the decision. The delay is attributed to the cautious approach of institutional investors, as reflected in active put buying and cheaper current month puts.

So while there is a lot of negative news circulating currently there are many mainstream companies and bankers already submitting significant amount of work and resources towards the rollout of a Bitcoin ETF. As mentioned in the article above if these ETFs are not approved it would have damaging impacts on the SEC with many choosing legal action against the government agency.

But it is a stark reminder of how the Crypto market is highly impacted by mainstream media that can quickly publish an article either negative or positive and cause significant losses or gains. A topic many social media influencers and celebrities have previously come under fire for doing. While the media gets away with it to sell a few articles.

The Future

As the crypto community awaits the SEC's decision on spot Bitcoin ETFs, the market remains in a state of uncertainty. While fear and speculation have led to a significant market correction, conflicting opinions among experts emphasise the complexity of predicting regulatory outcomes.

Investors must navigate these turbulent waters with caution and consider the potential for both approval and rejection scenarios. The saga will likely continue until the SEC makes its decision, which may not be before the second week of January according to various sources.

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