Matrixport Analysis: SEC to Reject ETF Applications in January with Final Approval Pushed to Q2 2024

Last updated: January 2, 2024 21:59 EST . 2 min read

Disclosure: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. By using this website, you agree to our terms and conditions. We may utilise affiliate links within our content, and receive commission.Source: PixabayCryptocurrency financial services company, Matrixport has projected a possible rejection of spot Bitcoin (BTC) ETF applications in January with final approval in the second quarter of the year.

In a Jan 3 market research, the firm gave reasons why the Securities and Exchange Commission (SEC) will reject a spot BTC ETF this month, shifting a probable approval date to next quarter and predicting steady asset prices based on other factors.

Matrixport’s latest report released a rare view that the SEC will reject all Bitcoin spot ETFs in January, and final approval may be achieved in the Q2. It also predicts that the price of Bitcoin will fall to 36,000 to 38,000, and recommended that investors buy put options or…

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According to the report, despite frequent meetings between staff of the financial regulator and ETF applicants which led to the refilling of applications, edits, and widespread projection of an imminent approval, a critical requirement remains until Q2 2024.

The political sphere remains pivotal to such approval and with Gary Gensler’s recent leaning and comments, more regulatory tightening needs to be done before a spot ETF will be rolled out.

“The current five-person voting Commissioners leadership critical for the ETF approval of the SEC is dominated by Democrats. SEC Chair Gensler is not embracing crypto in the US, and it might even be a very long shot to expect that he would vote to approve Bitcoin Spot ETFs.”

Several Democratic lawmakers have criticized the market for prent scams and lack of regulation calling for tougher policies to protect investors and most time just being anti-crypto as described by most commentators.

On his part, Gensler’s approach to the cryptocurrency market has been criticized as tightening positives leading to unfriendly conditions unlike Europe as can be seen in the proliferation of court cases.

Analysts at Matrixport referred to Gensler’s comments in December on the number of bad actors in the crypto market and the need for more compliance as reasons why an approval will not be seen in January.

Furthermore, approval will mean a regulatory nod for BTC as an alternative store of value. Either way, an approval in the second quarter still holds benefits for the market with bulls gearing towards a higher price.

Denial could see a slight price correction

Last year saw institutional investors go bullish on the market on the back of a potential spot ETF approval with billions pouring in across several sectors. Bitcoin institutional products inflows rose to $1.6 billion and its assets under management (AUM) surged above $36 billion.

However, a denial of an application will see slight liquidations from several quarters leading to a declining price, the firm wrote.

“If there is any denial by the SEC, we could see cascading liquidations as we expect most of the $5.1 billion in additional perpetual long Bitcoin futures to be unwound. We could see Bitcoin prices declining by -20% very quickly and falling back to the $36,000/$38,000 range.”

Matrixport has been known for its bullish stance regarding a spot BTC ETF previously projecting a bullish run through the end of last year and a $50,000 BTC price by the end of January.