- A controversial Matrixport report was blamed for Wednesday’s crypto crash.
- Matrixport co-founder moved to defend the company and the report.
- Crypto markets lost over $100 billion as Bitcoin ETF sentiment turned sour.
A bombshell prediction from crypto financial services company Matrixport, suggesting the Securities Exchange Commission (SEC) would likely reject spot bitcoin ETFs in January, sparked a $131 billion crypto crash on January 3. Matrixport co-founder Jihan Wu moved swiftly to distance the firm from the market fallout, claiming the controversial report was “beyond our control” despite being authored by one of their analysts.
Wu Distances Matrixport From Crypto Crash
Responding to allegations that Matrixport had ulterior motives to elicit a crypto crash, Wu moved to defend the controversial report, stating that analysts employed by the company are suitably qualified and operate autonomously without directives or sway from management.
Further dispelling rumors of deliberately crashing the crypto market, Wu underscored Matrixport’s strongly bullish outlook on Bitcoin throughout 2023 and its long-standing favorable stance toward the leading cryptocurrency.
According to Wu, the report was intended to advise Matrixport clients on the potential risks associated with spot Bitcoin ETF hype and not to provide crypto media with a negative narrative builder. With that, Wu made clear that media circulation of the report and its market consequences was not planned and had spiraled “beyond our control.”
Despite Wu’s explanation, some within the crypto community maintain that Wu and Matrixport willfully manipulated the crypto crash. Jason A. Williams, author of Bitcoin: Hard Money You Can’t F*ck With, thought it fitting to remind his followers about Wu’s role in the Blockchain Wars that resulted in the Bitcoin Cash (BCH) hard fork in 2017. At the time, Wu sided with the BCH crowd at the expense of Bitcoin.
Regardless of Wu’s stance on Bitcoin, the Matrixport report was interpreted by the market as a sell signal, leading to a significant drawdown in market cap.
Crypto Market Panic
Fueled by Matrixport’s assessment that the SEC would likely reject spot Bitcoin ETFs in January, the total crypto market cap saw a sharp drawdown of $131 billion, sinking from a local top of $1.817 trillion to $1.686 trillion by Wednesday evening (UTC).
The top three biggest 24-hour losers were MultiversX, Theta Network, and SATS (Ordinals,) losing 18.8%, 17.2%, and 16.7%, respectively, in value at the time of writing.
On the Flipside
- YouTuber Scott Melker attributed the crypto crash to mechanisms that bring derivative prices back in line with spot prices.
- Despite ongoing approval uncertainty, Wu expressed confidence that a spot BTC ETF is “inevitable” in the long term.
Why This Matters
The whipsaw reaction to a single analyst’s BTC ETF rejection prediction underlines lingering market instability and regulatory uncertainty in crypto. For an asset class deemed uninvestable by some, such dramatic price swings challenge building faith.
Read more on the Matrixport report predicting ETF rejection here:
Bitcoin ETF Poised for Rejection by SEC? $36K Projected
Find out about the changing dynamic of blockchain fees here:
Daily Bitcoin Fees Now Exceed All Other Blockchains