Contrary to the prevailing market sentiment, Matrixport analyst Markus Thielen foresees a rejection of all bitcoin spot ETF proposals by the Securities and Exchange Commission (SEC) in January.
Despite ongoing discussions and updated S-1 prospectuses exchanged between applicants and the SEC in recent weeks, Thielen highlighted in a report that these submissions still lack a crucial element necessary for SEC approval.
Thielen’s viewpoint is grounded in political dynamics and compliance concerns. He argues that although an ETF could catalyze crypto adoption in the U.S., the SEC chair remains wary of the industry’s need for more rigorous compliance measures.
“While an ETF could pave the way for crypto growth in the U.S., SEC Chair Gensler is not fully embracing the crypto sector,” Thielen noted. “It’s a stretch to expect his approval for bitcoin spot ETFs; though it could happen by Q2 2024, we anticipate a rejection in January.”
Gensler expressed his reservations about the crypto space, citing widespread fraud and non-compliance with securities laws, as well as other regulations such as anti-money laundering. In a recent interview with CNBC, he emphasized the prevalence of bad actors in the crypto field.
For years, the crypto industry has sought approval for a bitcoin spot ETF, with BlackRock, Fidelity, Franklin Templeton, Valkyrie, and VanEck among the 14 asset managers currently seeking SEC approval.
Should the SEC deny the bitcoin spot ETF applications this month, Thielen predicts a domino effect of liquidations, causing the value of bitcoin to plummet by approximately 20%, returning to the $36,000 to $38,000 range.
As of now, Bitcoin is trading at $44,562, experiencing a 5% gain since the beginning of the year and a 65% increase over the past three months, according to The Block’s price page. Despite potential short-term volatility following an SEC denial, Thielen remains optimistic for 2024. Considering historical patterns of U.S. election years and Bitcoin mining cycles, Matrixport anticipates bitcoin’s value surpassing its initial point of $42,000 by year-end, providing a positive outlook for long-term investors amid regulatory uncertainties.
