In a surprising turn of events, Matrixport, a leading cryptocurrency financial services platform, released a report warning investors of the potential rejection of all Bitcoin (BTC) spot ETFs by the U.S. Securities and Exchange Commission (SEC) in January. The report suggests that final approval may not be achieved until the second quarter of 2024.
Matrixport's analysis further predicts a significant decline in the price of Bitcoin, with recommendations for investors to consider put options or direct shorting of Bitcoin. The report challenges consensus expectations by asserting that the SEC will likely reject all pending Bitcoin spot ETF applications.
Notably, major financial institutions such as BlackRock, Fidelity, Ark Invest and VanEck have filed for Bitcoinspot ETFs, awaiting approval from the SEC. Meanwhile, Matrixport indicates that they have observed frequent meetings between the ETF applicants and SEC staff.
These interactions led to the applicants refiling their applications. According to Matrixport, all applications lack fulfillment of a critical requirement necessary for SEC approval. They suggest that this requirement could potentially be met by Q2, 2024. However, the expectation is that the SEC will reject all proposals in January.
SEC's political landscape
The latest report emphasizes the political landscape at the SEC, indicating that the current five-person voting commissioners, led by the Democrats, may influence the decision. SEC Chair Gary Gensler's cautious approach to cryptocurrencies adds to the skepticism, as he has not embraced crypto in the U.S.
This, according to Matrixport, suggests a potential reluctance to approve Bitcoin spot ETFs. The report suggests that Gensler views the crypto industry as requiring more stringent compliance, making the approval of a Bitcoin ETF unlikely. The potential rejection of Bitcoin ETFs could have significant repercussions for the market.
Matrixport estimates that approximately $14 billion of extra fiat and leverage have been deployed on the crypto market since traders began speculating on ETF approval in September 2023. If the SEC denies approval, the report anticipates cascading liquidations, with Bitcoin prices potentially falling by 20% rapidly, returning to the $36,000/$38,000 range.
Despite the potential rejection of the ETF, Matrixport expresses optimism regarding the long-term prospects of Bitcoin. It still expects the Bitcoin price to surpass its starting point for the year ($42,000) by the end of 2024. As reported by U.Today, Matrixport had previously forecast that the Bitcoin price was positioned to reach $50,000 in January. However, the latest report indicates a shift in their perspective.
Yuri Molchan
Vladislav Sopov
Gamza Khanzadaev
