The community witnessed a rollercoaster of emotions as Bitcoin prices surged to approximately $30,000 on October 16, fueled by rumors of the United States Securities and Exchange Commission (SEC) approving the country’s first spot Bitcoin Exchange-Traded Fund (ETF). However, the excitement quickly turned to disappointment as these reports were found to be false, resulting in a sharp retracement that wiped out substantial gains. Consequently, more than $74 million in derivatives positions were liquidated, impacting crypto exchanges such as OKX, Binance, and Bybit.

Bitcoin Continues to Experience High Volatility

At present, Bitcoin is trading around $28,200, a decline of nearly $2,000 from its October 16 peak. This showcases the level of volatility prevalent in the BTC markets. Recent data from Coinalyze reveals that approximately $56.6 million in short positions were liquidated during this period, accompanied by $18.4 million in long positions being closed. Notably, a significant portion of the shorts, totaling around $51 million, belonged to perpetual futures offered by exchanges such as OKX, Binance, and ByBit.

Among these exchanges, OKX saw the highest number of liquidations, with a substantial percentage of traders choosing to short the price action. In particular, $17.6 million in short positions were forcefully closed, accompanied by $6.24 million in long positions. Similar liquidations were observed on Binance and Bybit as well.

These numbers reflect the activities of traders leveraging their positions, aiming to capitalize on price movements using borrowed funds. With the provision of perpetual contracts, traders can either go long (buy) or short (sell), employing leverage of up to 100X on some exchanges. However, the drawback of using leverage is that if prices move against the trader, the exchange will close their position and seize the collateral originally deposited.

Spot Bitcoin ETF Prospects

The widespread rumor claiming that BlackRock, one of the world’s largest asset managers, had secured approval for a spot Bitcoin ETF from the SEC has been debunked. As of mid-October, the SEC has yet to greenlight any spot Bitcoin ETFs, including those presented by Fidelity and other firms. However, there is mounting pressure on the SEC to approve such a product.

An approval for a spot Bitcoin ETF by the SEC would be considered a significant breakthrough for the cryptocurrency industry. It has the potential to simplify how institutions gain regulated exposure to Bitcoin, generating optimism within the broader community. Furthermore, coupled with the upcoming halving event expected in 2024, where network rewards will be reduced by half, some analysts predict that BTC prices may surpass immediate resistance at around $32,000 following a spot BTC ETF approval.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.