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

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

On Wednesday, the SEC approved ETF applications from some of the biggest names on Wall Street, from BlackRock (BLK) to Franklin Templeton (BEN).

Major market participants, such as JPMorgan Chase (JPM) and Goldman Sachs (GS), have offered to help these asset managers in creating and redeeming shares for their new bitcoin-based funds. Most of the ETFs are expected to begin trading Thursday, issuers said.

Read more: Crypto live prices

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 added.

The SEC's approval caused a sharp increase in bitcoin price volatility. In the past 24 hours, the digital asset experienced a surge, reaching nearly $48,000 (37,675), followed by a downturn back into the $45,000 range, before subsequently recovering to currently trade slightly above the $46,000 mark.

The large price swings caused over $86m in liquidations of leveraged bitcoin (BTC-USD) positions on cryptocurrency exchanges, according to Coingecko data. Of these liquidations, the majority, around $51m, consisted of long positions.

According to CoinGlass data, the overall crypto market witnessed the liquidation of over $134m in long positions in the past 24 hours. This contributed to a total of $281m in total liquidations across major cryptocurrency exchanges.

Read more: Bitcoin rally stokes $50k speculation over spot ETF anticipation

Liquidations tend to occur during volatile price swings, when prices rise or fall sharply. During these market conditions, there is either a rush to buy or sell.

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The majority of liquidations in the past 24 hours were long positions held by derivatives traders who were anticipating the cryptocurrency's value to rise. However, due to the sudden market decline, they were forced to sell at a loss to minimize further losses.

Watch: Institutional investment brings new momentum to the crypto-space | The Crypto Mile

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Bitcoin price swings dramatically as SEC approves cryptocurrency for ETFs - Yahoo Finance UK