Bitcoin experienced an 8% decline on Wednesday, fueled by growing concerns surrounding the potential approval of a spot Bitcoin (BTC) ETF. This downturn erased the entire positive movement observed on January 1, prompting the liquidation of positions totaling $500 million across various derivatives exchanges.

“The chances of the ETF gaining approval diminished, leading to a market stalemate,” noted options analyst GreeksLive on X. “The skepticism was further fueled by the weakness observed in crypto mining stocks and the sell-off in various crypto-related U.S. stocks.”

Recent reports from Reuters suggested that a bitcoin ETF could receive approval as early as “Tuesday or Wednesday,” according to undisclosed sources. However, financial services firm Matrixport tempered optimistic expectations, stating, “We believe none of the applications meet a critical requirement necessary for SEC approval. While this could be fulfilled by Q2 2024, we anticipate the SEC rejecting all proposals in January.”

Following an initial surge to $45,500 in the morning, bitcoin’s value plummeted to $40,550 before rebounding to $42,200. The market experienced a $2 billion decrease in open interest due to liquidations, the declining value of BTC, and traders reducing exposure on both the long and short sides.