4-1-2024 (WASHINGTON) Despite widespread market expectations for the approval of bitcoin spot exchange-traded funds (ETFs), Matrixport analyst Markus Thielen offers a contrasting view, predicting that the Securities and Exchange Commission (SEC) will reject all proposals in January.
In a recent report, Thielen highlighted a critical requirement that these applications must meet for SEC approval, suggesting that the submitted proposals still fall short. The analyst based his perspective on political dynamics and compliance concerns, asserting that SEC Chair Gensler remains cautious about embracing cryptocurrency in the U.S.
While acknowledging the potential for a bitcoin ETF to catalyze crypto adoption in the U.S., Thielen noted Gensler’s stance on the need for more robust compliance within the industry. The analyst expressed skepticism about Gensler approving bitcoin spot ETFs and expects a rejection of all proposals in January, despite recent discussions and updated prospectuses.
In a recent CNBC interview, Gensler emphasized concerns about fraud and non-compliance in the crypto sector, indicating a cautious approach towards regulatory approval. The SEC chair cited issues related to securities laws, anti-money laundering, and public protection against bad actors as key challenges facing the industry.
The repercussions of a rejection could extend beyond regulatory implications. Thielen anticipates significant market reactions, with cascading liquidations of long bitcoin futures potentially leading to a sharp price drop of around 20%. This could bring Bitcoin’s price back to the $36,000 to $38,000 range.
As the crypto industry eagerly awaits a spot bitcoin ETF, with major asset managers vying for SEC approval, Thielen’s prediction underscores the regulatory uncertainties and potential market impact. However, he maintains a bullish outlook for 2024, citing historical patterns in U.S. election years and Bitcoin mining cycles. Despite potential short-term volatility, Matrixport expects Bitcoin’s value to exceed $42,000 by the year-end, providing a positive outlook for long-term investors navigating the regulatory landscape.
