In a surprising turn of events, Matrixport’s latest report has cast a shadow over the crypto market, suggesting that the U.S. Securities and Exchange Commission (SEC) is poised to reject all Bitcoin spot exchange-traded funds (ETFs) in January.
Matrixport predicts that final approval might not materialize until Q2, coupled with a forecasted Bitcoin price drop to the range of $36,000 to $38,000. The report recommends investors hedge their positions by acquiring put options or even taking a direct short position on Bitcoin.
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…
— Wu Blockchain (@WuBlockchain) January 3, 2024
Matrixport’s cautious stance is highlighted in its statement on X, “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 outlook remains.”
In response to this report, the broader crypto market experienced a brief downturn, with BTC briefly dipping below $41,000 and ETH falling below $2,100. The market, however, is showing signs of rebounding. Notably, liquidations reached a noteworthy $540 million in the past four hours.
Bloomberg ETF Analyst Disagrees And Clears The Air
Contrary to Matrixport’s pessimistic outlook, Bloomberg ETF Analyst Eric Balchunas expressed a more optimistic view on X, stating, “We have heard nothing to indicate anything but approval. Not sure why Matrixport analyst is flipping so quickly, still think the chance of passage is as high as 90%, including multiple mainstream journalists and internal sources.”
🚨 JUST IN: Bloomberg Senior #ETF Analyst Eric Balchunas says "we have heard nothing to indicate anything but approval" 🔥🚀
It's close 👀👀👀 #BitcoinETF pic.twitter.com/NnfHUIA5LG
— CoinEcho (@mycoinecho) January 3, 2024
Adding another layer to the unfolding narrative, Greekslive reported a diminishing likelihood of the ETF’s approval this week. Options data, including a drop in ATM option implied volatility to 52% for the week and below 65% for the January 12 expiration, suggests increased skepticism. Block trades are also witnessing active put buying, indicating a cautious sentiment among market participants.
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
In summary, Matrixport’s report has injected uncertainty into the crypto market, contrasting with more optimistic sentiments from other industry experts. The unfolding developments surrounding Bitcoin spot ETFs will likely shape the market’s trajectory in the coming weeks.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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