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The crypto financial services platform Matrixport has said it does not see the U.S. Securities and Exchange Commission approving any spot bitcoin exchange-traded fund in January. In its latest report, the crypto platform said it foresees the price of bitcoin dropping “back to the $36,000/$38,000 range.”
The crypto financial services platform Matrixport has released a new report suggesting that the U.S. Securities and Exchange Commission (SEC) is unlikely to approve spot bitcoin exchange-traded funds (ETF) on or before January 9, as anticipated. In the report released on Jan. 2, the platform asserts that “all applications [will] fall short of a critical requirement that must be met before the SEC approves.”
According to the Matrixport report, spot Bitcoin ETF applicants are only likely to satisfy the SEC’s demands after January. As reported by Bitcoin.com News, the SEC and spot Bitcoin ETF applicants have held several meetings to iron out issues that the former wants resolved. Several reports indicate that applicants like Blackrock and Grayscale Investments have acceded to some of the SEC’s demands.
One key demand made by the SEC is for spot Bitcoin ETFs to adhere to the “cash only” rule. While most applicants have since made the required amendments, some players in the crypto space have criticized the demand. For instance, Gabor Gurbacs, the director of the asset management firm Vaneck, has labelled the SEC’s cash-only requirement “nonsense.”
James Angel, a professor at Georgetown University, has also blasted the Commission for ignoring the benefits of an “In-Kind Model.” However, despite the pushback against some of its tactics, the SEC has seemingly continued to demand more amendments to spot ETFs already submitted.
Explaining why the SEC is not expected to approve the applications before Q2 2024, the Matrixport report said:
The current five-person voting Commissioners leadership critical for the ETF approval of the SEC is dominated by Democrats. SEC Chair [Gary] Gensler is not embracing crypto in the U.S. and it might even be a very long shot to expect that he would vote to approve bitcoin spot ETFs.
The report also suggested that Gensler is less inclined to approve a spot bitcoin ETF because doing so would be tantamount to legitimizing BTC as an alternative store of value.
Commenting on the top crypto asset’s price scenario should the SEC refuse to approve the applications, Matrixport, which recently predicted a BTC price break out in January, said it sees the value dropping “by -20% very quickly and falling back to the $36,000/$38,000
range.”
To hedge against any steep drop in price that follows the SEC’s failure to approve applications by Jan. 5, the Matrixport report said investors should consider hedging with options.
“Matrix on Target recommends that traders hedge their long exposure by buying the $40,000 strike puts for the end of January or even going outright short Bitcoin
through options,” the report said.
At the time of writing (9.00 AM EST Jan. 3), one BTC was trading at just over $42,000 or 7% lower than the $45,000 seen 24 hours earlier.
After Matrixport released its latest report, some observers were quick to highlight the fact that the crypto platform’s last report predicted that the price of BTC to top $50,000 in January. Others have questioned the motives behind Matrixport’s about face. These concerns prompted Matrixport co-founder Jihan Wu to issue a statement explaining the relationship between Matrixport researchers and management.
Wu claimed that the report was only intended for Matrixport’s clients but admited that “its wide spread by the media was not planned by Matrixport and is beyond our control.” The co-founder also sought to downplay the significance of Matrixport’s apparent U-turn.
“Looking at Bitcoin’s history and its future prospects, the current volatility and the potential approval uncertainty of a Bitcoin ETF in January 2024 are ultimately of no importance. In the long term, Bitcoin will always prevail,” Wu insisted.
He ended the social media post by reiterating his belief that the SEC will eventually approve spot bitcoin ETFs which in turn will cementthe crypto asset’s status as “a store of value and a risk-hedging asset akin to be better than gold.”
