Bitcoin BTC +0.21% 's price pulled back below the $45,000 mark on Tuesday, as the broader crypto market awaits news from the Securities and Exchange Commission about its ongoing review of more than a dozen applications for spot ETFs.

The price of the world's largest cryptocurrency by market capitalization declined by over 4% in the past 24 hours, reaching $44,933 at 9:20 a.m. ET, according to The Block's Price Page.

The bitcoin market has experienced a period of high volatility over the past 24 hours following a security breach of the SEC’s official X account on Tuesday, which resulted in a false message about the approval of a spot bitcoin ETF.

This post triggered volatile market action, causing the bitcoin price to surge to almost $48,000. However, once the agency clarified that the tweet was fake, the price plunged back below the $45,000 mark, causing a significant amount of liquidations.

Bitfinex analysts said that despite the false post causing a stir in markets, "U.S. asset managers still stand resolute in their optimism for the approval of spot bitcoin ETFs by the securities regulator."

Bitcoin has dipped below the $45,000 as ETF anticipation causes market volatility. Image: The Block.

Possible increase in institutional flows

According to Bitfinex Head of Derivatives Jag Kooner, the approval of a spot bitcoin ETF could lead to an influx of approximately $155 billion into BTC market capitalization, based on the current total capitalization of bitcoin funds on offer in the market. "An increase of more institutional flows would indeed be the ultimate test especially at a time where the crypto options market and the CME exchange open interest is soaring to new highs," Kooner said in an email sent to The Block.

XRPL Commons Founder David Bchiri said that the possible approval of spot bitcoin ETFs by the SEC could usher bitcoin into the mainstream financial system.

"We can likely expect a wave of approvals in other jurisdictions across the globe following this, after the stamp of approval from the U.S. The applications from traditional finance players like Blackrock and VanEck amongst others will play a significant part in giving those more cautious investors and advisors an opportunity to engage with crypto," Bchiri added in an email sent to The Block.

Price correction risks persist

According to Nansen Principal Research Analyst Aurelie Barthere, institutional inflows following possible ETF approvals "could diminish volatility in spot markets as new liquidity enters the space." However, in a note sent to The Block, Barthere said she anticipates that the initial approval could be followed by a short selling period in bitcoin, "as traders take a leaf out of the buy the rumor sell the fact playbook."

CryptoQuant analysts also highlight notable price correction risks that stalk the asset's market dynamics. In a report published on Wednesday, CryptoQuant analysts pointed to data that showed short-term bitcoin holders are selling their coins.

"A spike in this metric above 1.04 indicates short term holders are starting to take profits after the strong rally in prices," the report added.