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News In Brief

Bitcoin and Ethereum Plunge as Financial Markets Fall

On Thursday morning, cryptocurrency markets experienced a significant decline as they grappled with the broader impact of a major downturn in traditional financial markets. The world's largest digital asset plummeted through the $64,000 and Ethereum below the $3,200 mark amid a sell-off driven by major stock indices. The S&P 500 fell by 2.32% yesterday, the Dow Jones Industrial Average dropped 1.25%, and the Nikkei 225 experienced a decline of over 5% this week, placing substantial pressure on Bitcoin.

The drop in Bitcoin was particularly pronounced due to the sharp fall in the Nasdaq and technology stocks, which have witnessed an alarming 8% decrease since last week. Long liquidations on cryptocurrency exchanges were notably severe, with $250 million in positions liquidated, including $100 million lost in Ethereum following the recent launch of a Spot Exchange Traded Fund (ETF). Binance traders experienced a staggering 88% liquidation of long positions, while Asian traders saw up to 94% of long trades liquidated.

Currently, Bitcoin is trading at $64,250, down 1.76% on the day, while Ethereum is at $3,169, reflecting a decline of just over 5% on the day.

ETHEREUM SPOT ETF APPROVED BY SEC

The Securities Exchange Commission (SEC) has approved an Ethereum Spot Exchange Traded Fund (ETF), ending a year-long wait. The U.S. regulatory board gave the green light just one month after dropping their investigation into whether Ethereum should be classified as a security. This decision marks a significant turnaround in financial regulation and brings the cryptocurrency space closer to mass adoption.

An ETF is a fund that allows investors to buy and sell a particular asset on the stock exchange without owning the underlying asset. This can be a cost-effective way to profit from an investment, avoiding the complexities of buying and selling on unregulated cryptocurrency exchanges and the need to transfer holdings to hard or cold wallets, thus saving time.

The Bitcoin Spot ETF has been extremely successful since its launch in January, with total inflows reaching an estimated $17.85 billion. However, many believe an Ethereum ETF will not generate the same level of inflows due to Bitcoin's "digital gold" narrative, while Ethereum functions more like an open-source platform, similar to an app store, which is equally significant in many ways.

Several analysts predict that the Ethereum ETF could propel its price to $6,500. Steno Research, a research firm, estimates that the ETF could attract between $15 to $20 billion in investments in its first year, compared to Bitcoin, which reached that figure within its first few months. Despite the approval, Ethereum's price has seen a muted effect, trading at $3,477 as of early Tuesday morning.

Mt. Gox Transfers Massive Amounts of Bitcoin to Multiple Wallets

Former cryptocurrency exchange Mt. Gox, notorious for its 2014 hack that lost hundreds of millions of dollars in Bitcoin (BTC), has recently moved over $2.85 billion worth of Bitcoin to exchanges. This transfer occurred in the early hours of Tuesday morning during Asia trading hours. The movement involved sending 5,000 BTC, valued at approximately $340 million, to one wallet and a substantial 37,000 BTC, estimated at around $2.5 billion, to another wallet.

The first wallet transferred $130 million worth of BTC to the cryptocurrency exchange Bitstamp. This transaction caused significant market anxiety, pushing Bitcoin’s price to $66,256 by 8:30 am UK time. Historical data suggests that large transfers from Mt. Gox often lead to sell-offs, leading to fears of a similar outcome.

Mt. Gox has committed to repaying former customers and creditors with over $9 billion in Bitcoin and $73 million in Bitcoin Cash, further intensifying market concerns.