Bitcoin sees sharp rise in volatility after ETF approval

A spot bitcoin exchange traded fund is a financial product that investors hope will open the gateway for mainstream capital to flood the crypto market

Bitcoin has experienced a sharp rise in price volatility following the approval of several spot bitcoin exchange traded funds (ETFs) by the US SEC on Wednesday.

A spot bitcoin exchange traded fund is a financial product that investors hope will open the gateway for mainstream capital to flood the crypto market.

On Wednesday, the Securities and Exchange Commission approved ETF applications from some of the biggest names on Wall Street, from BlackRock to Franklin Templeton.

Major market participants, like JPMorgan Chase and Goldman Sachs, have offered to help these asset managers in creating and redeeming shares for their new bitcoin-based funds. Most of the exchange-traded funds are expected to begin trading Thursday, issuers said.

SEC Chair Gary Gensler made it clear in a statement Wednesday that his agency "did not approve or endorse bitcoin" when it signed off on the new products. Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto, he said.

The Securities and Exchange Commission's approval caused a sharp rise in bitcoin price volatility. In the last 24 hours, the digital asset witnessed a surge, reaching nearly $48,000, followed by a downturn back into the $45,000 range, before subsequently recovering to trade marginally above the $46,000 level.

The big price swings caused more than $86m in liquidations of leveraged bitcoin (BTC-USD) positions on crypto currency exchanges, as per Coingecko data. Of these liquidations, the majority, nearly $51m, consisted of long positions.

As per CoinGlass data, the overall crypto market witnessed the liquidation of more than $134m in long positions in the last 24 hours. This contributed to a total of $281 million in total liquidations across major crypto currency exchanges.