Table of Contents
- Back To Square One?
- Galaxy Digital Disagrees
- What Happens If Applications Are Denied?
- Forecast For 2024
Markus Thielen, analyst at Matrixport, has predicted that the United States Securities and Exchange Commission will reject all spot Bitcoin ETF applications this month.
According to Thielen, SEC Chair Gary Gensler is not embracing crypto in the US, in a stance contrary to market expectations.
Back To Square One?
In a stance against market sentiment, Matrixport has predicted that the Securities and Exchange Commission will reject all spot Bitcoin ETF applications in January. Matrixport analyst Markus Thielen stated in a report that the spot Bitcoin ETF applications still fall short of a critical requirement that must be met despite the updated filings and numerous meetings between the Securities and Exchange Commission and the ETF applicants. The analyst also noted that the current five-member commission leadership, critical for the ETF approval, is currently dominated by Democrats.
“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. This might be fulfilled by Q2 2024, but we expect the SEC to reject all proposals in January.”
According to Thielen, SEC Chair Gary Gensler feels that the crypto industry still needs considerably more compliance, given the number of bad actors and non-compliance within the space. Gensler had stated in an interview,
“There’s been far too much fraud and bad actors in the crypto field. There’s a lot of non-compliance, not only with the securities laws but other laws around anti-money laundering and protecting the public against bad actors there.”
He added that approving a spot Bitcoin ETF would help the crypto space. However, Thielen believes there is no need to approve a spot Bitcoin ETF from a political perspective.
“An ETF would certainly enable crypto overall to take off, and based on Gensler’s comments in December 2023, he still sees this industry in need of more stringent compliance. From a political perspective, there is no reason to approve a bitcoin spot ETF that would legitimize Bitcoin as an alternative store of value.”
Galaxy Digital Disagrees
The highly anticipated approval of a spot Bitcoin ETF by the Securities and Exchange Commission has helped drive Bitcoin prices higher. As a result, the price of the asset crossed price levels not seen in over a year. This is why ETF applicants have taken serious issue with the Matrixport report. According to Alex Thorn, Head of Research at Galaxy Digital, The Matrixport report was bewildering and nonsensical. Galaxy Digital is one of the dozen or so firms that have applied for a spot Bitcoin ETF.
What Happens If Applications Are Denied?
The crypto space has long been vying for a spot Bitcoin ETF, with several firms such as BlackRock, Valkyrie, VanEck, Fidelity, and Franklin Templeton among 14 financial institutions in the fray. According to Thielen, if the Securities and Exchange Commission denies spot Bitcoin applications in January, it could significantly impact the price of Bitcoin. According to Thielen, rejection could see cascading liquidations and lead to a potential drop of 20% in the price of Bitcoin, pushing it back to the $36,000 to $38,000 price range.
Bitcoin is currently trading at just under $43,000, down by over 5% over the past 24 hours.
Forecast For 2024
Despite the gloom and doom regarding the spot Bitcoin ETFs predicted by Thielen and potential short-term volatility, the analyst is quite bullish when it comes to Bitcoin and 2024. Matrixport expects the value of Bitcoin to surpass its starting point of $42,000 by the end of 2024. This prediction draws on the historical pattern of US election years and Bitcoin mining cycles. Along with the presidential elections, the Bitcoin halving event could also be a significant catalyst for a price increase.
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