Matrixport issued a research report on January 3, warning that due to the fact that the requirements of the Securities and Exchange Commission (SEC) for Bitcoin spot ETFs have not been fully met, the SEC will not approve any Bitcoin spot ETFs in January, and Bitcoin is expected to experience a significant pullback to around $36,000 to $38,000.
The sudden drop in Bitcoin occurred on the evening of January 3, around 20:00, plummeting from $44,500 to $40,750, marking the most significant decline in several months. At the time of writing, the price has slightly rebounded and is currently at $42,550, with a 24-hour decline of 6.3%.
The reason for the sudden drop is speculated by the community to be related to a research report titled “Why will the SEC reject Bitcoin spot ETF applications again?” released by Matrixport in the evening. The report suggests that although Bitcoin spot ETF applicants have held multiple meetings and negotiations with the SEC, the requirements of the SEC for Bitcoin spot ETFs have not been fully met, so the SEC will not approve any Bitcoin spot ETF applications in January and will delay them until the second quarter of 2024.
Matrixport explains that SEC Chairman Gary Gensler has long held a negative attitude towards cryptocurrencies and believes that cryptocurrencies are not yet subject to strict regulation. Therefore, from a political perspective, Gensler is unlikely to quickly change his attitude and embrace Bitcoin. The SEC’s five-member voting committee, dominated by the Democratic Party, will also not vote to approve Bitcoin spot ETFs and recognize Bitcoin as a store of value in the short term.
Given this background, Matrixport also states in the report that once the SEC rejects the proposals of the applicants, the price of Bitcoin will plummet to around $36,000 to $38,000 in a short period of time (a decline of about 20%). The bullish funds that have been betting on Bitcoin spot ETFs potentially passing since September 2023 will also be liquidated.
Matrixport even suggests directly that if there is no information about any approved Bitcoin spot ETFs by January 5, investors should immediately buy put options for Bitcoin or directly short Bitcoin.
While we cannot determine whether the market crash is related to Matrixport, it is true that Bitcoin experienced a significant decline within hours of the release of the report, with over 170,000 people liquidated in the past 24 hours. CoinAlpha reminds investors that the current market conditions are volatile and advises caution.
Furthermore, Matrixport also states that although they believe the price of Bitcoin will be influenced by the SEC’s decision, the Bitcoin halving event in 2024 and the US presidential election may have a positive impact on its price. The price of Bitcoin at the end of 2024 is expected to be higher than the beginning of the year at $42,000.
Related reports:
K33 Analyst: Bitcoin spot ETF approval will result in “over 70% decline,” with a 5% chance of being rejected by the SEC.
Matrixport’s custody platform, Cactus Custody, supports multi-chain functionality with MMI.
After 17 months, capital in the cryptocurrency market has turned into “net inflows” for the first time, and Matrixport predicts Bitcoin will reach $45,000 by the end of the year.