BTC Approaches $41k as US SEC Expected to Deny All Spot BTC ETF Applications in January

• Bitcoin declined by over 5.5% on Wednesday following a statement from a cryptocurrency financial service provider indicating that the US SEC is expected to reject all spot BTC ETF proposals in January.

Matrixport, a cryptocurrency financial services firm, reported in a recent research document that the U.S. Securities and Exchange Commission (SEC) is likely to deny all applications for spot Bitcoin exchange-traded funds (ETFs) in January.

Initially, there was considerable optimism regarding approval; however, Matrixport has indicated a potential shift in this outlook. Consequently, this information led to a rapid decline in Bitcoin’s price by 6.5% within 20 minutes, falling from $44,400 to $41,500.

Bitcoin Price Chart | Source: Coinstats

The firm also mentioned that it could take until the second quarter of 2024 for the regulator to approve the first ETF, resulting in Bitcoin dropping to $42,500 over the past 24 hours.

See Also: Fidelity and Galaxy Charge 0.39% Fees To Shareholders Of Its Spot BTC ETFs

Matrixport Predicts Bitcoin Could Fall to $36-38K If SEC Rejects Spot ETF

Bitcoin faced a notable decline on Wednesday after Matrixport released a pessimistic weekly report, forecasting that the SEC is likely to reject the spot Bitcoin ETF applications in January.

Despite several companies that submitted applications for a spot BTC ETF recently updating their submissions, Matrixport believes they will “not meet a crucial requirement that must be satisfied before the SEC grants approval.”

These criteria may be fulfilled by Q2 2024, but the firm expects that no proposals will receive approval this month.

If the securities regulator denies the applications, the market could experience “cascading liquidations as we anticipate most of the $5.1 billion in additional perpetual long Bitcoin futures to be unwound,” Matrixport stated in the report.

As a consequence, Bitcoin’s price may experience a significant drop of 20%, retreating to the $36,000 – $38,000 range.

Nonetheless, even if the SEC does not approve the spot ETF this year, Matrixport predicts that Bitcoin (BTC) will finish 2024 at a higher price than its starting level, as U.S. election years and halving events have historically enhanced the cryptocurrency’s value.

See Also: Bitcoin Rallies Past $45,000 Level As Spot BTC ETF Deadline Nears

Bitcoin Remains Narrative-Driven

The recent decline in Bitcoin’s price underscores the significant influence that a change in narrative can exert on market dynamics.

In the past three months, BTC experienced an increase of nearly 70%.

While improving macroeconomic conditions and expectations of a dovish shift by the Federal Reserve contributed positively, the majority of these gains are linked to increasing beliefs that a first spot ETF will soon be approved.

Similarly, Matrixport’s negative report also had an immediate adverse effect.

According to Reflexivity Research founder Will Clemente, Matrixport’s report resulted in a loss of over $1 billion in open interest (OI) for Bitcoin futures contracts in a single candlestick movement.

Crypto investor Scott Melker noted that the market saw $500 million in liquidations in under an hour, with 95% being long positions.

A comparable situation occurred last year when Bitcoin surged from approximately $28,000 to $30,000 following a false report of a spot ETF approval that circulated on X (formerly Twitter).

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