The latest report from Matrixport has raised eyebrows, suggesting the Securities and Exchange Commission (SEC) might reject all Bitcoin spot ETFs in January. 

Among other things, the study acknowledges the fact that the current leadership of the SEC is mostly Democratic, as well as the cautious stance on crypto taken by SEC Chair Gensler.

‍

Matrixport Points to Q2 2024 for Fulfillment

Despite frequent meetings between ETF applicants and SEC staff, leading to application refilings, Matrixport contends that a critical requirement necessary for SEC approval still needs to be fulfilled. While the Matrixport report suggests the possibility of meeting this requirement by Q2 2024, it anticipates a sweeping rejection of all proposals in January.

SEC Chair Gensler's reservations about crypto adoption in the US play a pivotal role in Matrixport's analysis. The report suggests that Gensler, not fully embracing the crypto industry, is unlikely to vote in favor of approving Bitcoin Spot ETFs. The political backdrop further discourages the approval of an ETF that would legitimize Bitcoin as an alternative store of value, according to Matrixport.

‍

Cascading Liquidations on ETF Rejection

Matrixport's report sheds light on the significant market impact if the SEC rejects Bitcoin spot ETFs. 

The influx of at least $14 billion into crypto, associated with ETF approval expectations, could lead to cascading liquidations in the event of denial. Matrixport predicts a rapid -20% decline in Bitcoin prices, potentially falling back to the $36,000/$38,000 range. Even in the event of SEC denial, Matrixport expects Bitcoin prices to be higher by the end of 2024, considering historical trends in the US election and Bitcoin mining years.

Matrixport's report coincides with Bitcoin's recent rally above $45,000, driven by investors' anticipation of the SEC's potential approval of spot Bitcoin ETFs. Reports suggest the SEC may notify the 14 spot Bitcoin ETF applicants of its decision ahead of the January 10 deadline, heightening investor anticipation for the historic approval.