Matrixport Analyst: Expect all ETF applications to be rejected in January, Bitcoin to fall to $36K-38K

According to analysts at trading institution Matrixport, 1/3 of reports, they believe that a Bitcoin spot ETF will be launched in the second quarter of 2024, but they expect the SEC to reject all proposals in January.

Matrixport Not Optimistic About ETF Approval in January

Matrixport analysts stated that they had predicted earlier in the year that Bitcoin could reach $45,000 before Christmas. They even anticipate that if a Bitcoin spot ETF meets all the requirements of the U.S. Securities and Exchange Commission (SEC), Bitcoin could soar to $50,000 by the end of January 2024.

Currently, there have been frequent meetings between ETF applicants and the SEC, with applicants resubmitting their applications, but Matrixport believes that none of the applications meet a key requirement necessary for SEC approval.

As a result, it is likely that a Bitcoin spot ETF may not materialize until the second quarter of 2024, with expectations that the SEC will reject all proposals in January.

Matrixport: SEC's Attitude Not Optimistic

Matrixport analysts mentioned that the five-member voting committee within the SEC is crucial for approving ETFs and is dominated by Democrats.

SEC Chairman Gensler is not enthusiastic about cryptocurrencies in the U.S., and the likelihood of him voting in favor of a Bitcoin spot ETF is very slim.

Although ETFs would undoubtedly boost the entire cryptocurrency industry, based on Gensler's comments in December 2023, he still believes that this industry requires stricter regulation. From a political standpoint, there is no reason to approve a Bitcoin spot ETF to legitimize Bitcoin in another form.

Leveraged Funds Mostly Betting on ETF Approval

Since traders began betting on ETF approval in September 2023, at least an additional $14 billion in fiat and leveraged funds have been invested in cryptocurrencies. Some of this liquidity may be related to monetary policy, but within the $14 billion long positions, around $10 billion may be related to the expected approval of an ETF.

If SEC Rejects, Expect Continuous Liquidation

Matrixport analysts mentioned that if the SEC rejects any applications, continuous liquidation may occur. They anticipate that most of the additional $5.1 billion Bitcoin futures positions will be liquidated, potentially resulting in a rapid -20% drop in Bitcoin prices, falling back to the range of $36,000 to $38,000.

Stay cautious until January 5th!

Matrixport analysts advised that as of Friday, January 5th, 2024, if there is no news, it would be wise to hedge. They suggest traders to purchase put options with a strike price of $40,000 expiring at the end of January, or even directly short Bitcoin with options to hedge long positions.

There's Still Hope!

Matrixport analysts mentioned that even if the SEC rejects the ETF, they still expect Bitcoin's price to be higher by the end of 2024 than the $42,000 level at the beginning of the year, as U.S. election years and Bitcoin mining years typically bring positive news.