Bitcoin and Ethereum have reactred with a price fall to the newly published Matrixport report on possible spot Bitcoin ETF approval.
Despite the widespread anticipation within the crypto community for the potential approval of the Bitcoin (BTC) spot ETF later this month, Markus Thielen, a senior analyst at Matrixport, holds a different perspective from other analysts who believe that approval is imminent.
In a recent report published by the company, the analyst claimed the US Securities and Exchange Commission (SEC) is poised to reject all the 12 spot ETFs awaiting approval by the agency.
Bitcoin Spot ETFs Could Be Delayed
The Matrixport analysts said the reason for the predicted outcome for the proposed investment products is due to lack of critical requirements by the issuers which must be met before the agency reviews the application for approval.
However, these undisclosed requirements could be met during the second quarter of 2024, making way for the potential approval of the spot ETFs come Q2.
“While we have seen frequent meetings between the ETF applicants and staff from the SEC, which resulted in the applicants refiling their applications, we believe all applications fall short of a critical requirement that must be met before the SEC approves. This might be fulfilled by Q2 2024, but we expect the SEC to reject all proposals in January,” reads the report.
The analysts also suggested that the delay could be attributed to the dominance of Democrats in the five-person voting commissioner’s leadership which is critical for the ETF approval.
According to the report, SEC Chair Gary Gensler’s reluctance to embrace crypto could be another hindrance that would possibly impact the introduction of spot BTC funds in the US market.
BTC Future Outlooks for 2024
Matrixport analysts project that if the SEC rejects ETF applications, BTC could experience a significant decline, trading between the $36,000/$38,000 range.
The crypto asset might drop further by 20% following the ETF denial and as such has advised traders to “hedge long exposure” to avoid potential losses.
“Suppose market participants have not heard of any approvals by Friday, January 5, 2024. In that case, Matrix on Target recommends that traders hedge their long exposure by buying the $40,000 strike puts for the end of January or even going outright short Bitcoin through options,” reads the report.
Despite the short-term potential decline, analysts also believe that BTC has the potential to surge to the moon this year.
According to the report, events such as the upcoming Bitcoin halving and the US Presidential election are expected to be the primary drivers for the anticipated move.
“Even if the SEC would deny the ETF, we still expect Bitcoin prices to be higher by the end of 2024 than when they started the year ($42,000), as US election years and Bitcoin mining years tend to be positive.
Over $460 Million Longs Liquidated
The crypto market reacted negatively to the news of potential spot ETF denial, with Bitcoin dropping 8% to $40,000. However, at the time of writing, the crypto asset is trading at $42,000. Ethereum (ETH) on the other hand, also declined to $2201 after weeks of trading around $2300.
According to CoinGlass data, long traders incurred approximately $462 million in losses across major centralized exchanges in the past hour. These exchanges include Binance, OKX, and Huobi (recently rebranded as HTX).