In a surprising turn of events, Matrixport’s latest report has cast a shadow over the cryptocurrency market, suggesting that the US Securities and Exchange Commission (SEC) is set to reject all exchange-traded funds (Bitcoin Spot ETF) in January.
Matrixport predicts that final approval may not materialize until the second quarter, along with an expected drop in Bitcoin price to the $36,000 to $38,000 range. The report recommends investors hedge their positions by purchasing put options or even taking an outright short position in Bitcoin.
On January 3, Chinese reporter Colin Wu posted the following on X:
“Matrixport’s latest report released a rare view that the SEC will reject all Bitcoin spot ETFs in January, and final approval may be achieved in the Q2. It also predicts that the price of Bitcoin will fall to 36,000 to 38,000, and recommended that investors buy put options or even directly short Bitcoin.”
Matrixport’s Report and Bitcoin Spot ETFs
Matrixport’s cautious stance is highlighted in its statement on X, “Matrix on Target projects a January rejection of Bitcoin spot ETFs by the SEC, warning traders to hedge long exposure. With SEC Chairman Gensler’s skepticism towards cryptocurrencies, a possible -20% Bitcoin price drop is anticipated following the ETF denial, although a positive outlook remains for the end of 2024.”
The report goes on stating that “An ETF would certainly enable crypto overall to take off, and based on Gensler’s comments in December 2023, he still sees this industry in need of more stringent compliance. From a political perspective, there is no reason to approve a Bitcoin Spot ETF that would legitimize Bitcoin as an alternative store of value.”
“If there is any denial by the SEC,” the report points out that there could be cascading liquidations,” as “most of the $5.1 billion in additional perpetual long Bitcoin futures” are expected “to be unwound.” The report forecasts a drop in Bitcoin prices “by -20% very quickly and falling back to the $36,000/$38,000 range.”
In response to this report, the broader crypto market experienced a brief slowdown, with BTC briefly falling below $41,000 and ETH falling below $2,100. However, the market is showing signs of recovery. In particular, settlements reached a remarkable $540 million in the last four hours.
Bloomberg ETF Analyst Disagrees and Sets the Record Straight
Contrary to Matrixport’s pessimistic outlook, Bloomberg ETF analyst Eric Balchunas expressed a more optimistic view on X, stating: “We haven’t heard anything to indicate anything other than approval. Not sure why the Matrixport analyst is changing so quickly, I still think the chance of approval is as high as 90%, including multiple mainstream journalists and inside sources.”
CoinEcho post on X, dated January 3, reads as follows:
“JUST IN: Bloomberg Senior #ETF Analyst Eric Balchunas says “we have heard nothing to indicate anything but approval.”
Adding another layer to the developing narrative, Greekslive reported a decreasing likelihood of ETF approval this week. Options data, including a drop in ATM options implied volatility to 52% for the week and below 65% for the January 12 expiration, suggests further skepticism. Block trades are also witnessing active buying of puts, indicating a cautious sentiment among market participants.
In short, the Matrixport report has injected uncertainty into the cryptocurrency market, in contrast to the more optimistic sentiments of other industry experts. The events unfolding around Bitcoin spot ETFs will likely shape the trajectory of the market in the coming weeks.
By Leonardo Perez
