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- The SEC is meeting with major exchanges like NYSE and CBOE, with potential Bitcoin ETF approval announcements expected by January 5th.
- Speculations about the rejection of Bitcoin spot ETFs by the SEC have led to market uncertainty, affecting Bitcoin’s price and the broader cryptocurrency market.
According to a recent FOX Business report, SEC staff attorneys from the Division of Trading and Markets had a meeting on Wednesday, January 3rd, with officials from major exchanges — the New York Stock Exchange (NYSE), Nasdaq, and Chicago Board Options Exchange (CBOE) — where the ETFs would potentially be traded. The SEC is expected to begin notifying issuers of approval by this Friday, January 5.
FOX Journalist Eleanor Terrett recently tweeted in response to these meetings with major exchanges regarding the 19b-4 submissions by the Bitcoin (BTC) Spot ETF issuers.
🚨SCOOP: The @SECGov is holding meetings today with the exchanges (@Nasdaq, @CBOE, @NYSE) to finalize comments on the 19b-4s submitted by the $BTC Spot ETF issuers.
— Eleanor Terrett (@EleanorTerrett) January 3, 2024
Impact of Potential Rejection of Bitcoin Spot ETF on Bitcoin Price
Matrixport has projected that the Securities and Exchange Commission (SEC) might reject all Bitcoin spot ETFs, potentially spreading fear in the market and contributing to the ongoing correction. In a recent tweet, Matrixport anticipates a January rejection for Bitcoin Spot ETFs by the SEC and advises traders to hedge long exposure. Given SEC Chair Gary Gensler’s skepticism towards cryptocurrencies, a potential 20% drop in Bitcoin price is anticipated upon ETF denial. However, a positive outlook for Bitcoin by the end of 2024 remains.
Matrix on Target projects a January rejection for Bitcoin Spot ETFs by the SEC, cautioning traders to hedge long exposure. With #SEC Chair Gensler’s skepticism towards #crypto, a potential -20% #Bitcoin price drop is anticipated upon #ETF denial, though a positive end-of-2024… pic.twitter.com/IgaMhBJtiP
— Matrixport (@realMatrixport) January 3, 2024
While Matrixport’s report cautions investors to hedge long exposure, suggesting that Bitcoin could drop by an additional 20% following the ETF denial, the current price of BTC is around $43,055.80, having fallen by 4.79% within 24 hours but up by 0.18% over 7 days. For visualization, the overall BTC price trend is presented in the graph below.
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Market Response to Potential ETF Approval
Following these developments, CNF also reported that the cryptocurrency market experienced a significant setback as prices of Bitcoin and various altcoins plunged by 8% to 20% in a sudden crash. While the exact cause remains uncertain, the most plausible explanation is a coordinated sell-off among large institutional investors, potentially aiming to acquire assets at lower prices before the potential approval of a Bitcoin ETF and to maximize profits before the market potentially sets new all-time highs this year.
Globally, no major unforeseen events, including economic crises or geopolitical turmoil, have been linked to this market volatility. Key incidents like FTX 2.0, Terra’s collapse, or significant regulatory actions against Bitcoin seem unrelated.
Another recent report, supported by a tweet, indicates that declining crypto mining stocks and a sell-off in crypto-related U.S. stocks have heightened market skepticism. Options market data shows increased put buying, suggesting institutional investors’ cautious stance on the ETF market.
The likelihood of the ETF's passage became less and less likely, and the market saw a stalemate. Weakness in crypto mining stocks, and the sell-off in several crypto-related U.S. stocks, also reinforced the market's skepticism.
ATM option IV plummeted to 52% for the week and… pic.twitter.com/orjr1Wcwwf— Greeks.live (@GreeksLive) January 3, 2024
As my final thoughts on this matter, the current trends in the cryptocurrency market and the cautious approach of investors signal the need for a balanced perspective, especially in light of the anticipated ETF developments.
