Markus Thielen, analyst at Matrixport, predicts a challenging scenario for bitcoin enthusiasts in January. Contrary to general optimism, Thielen believes that the United States Securities and Exchange Commission (SEC) will deny all proposals for bitcoin spot exchange-traded index funds (ETFs).
Behind the scenes, there has been a frenzy of activity, with frequent meetings and S-1 prospectus updates between applicants and the SEC. However, Thielen, in his recent report, pointed out that these requests still do not satisfy a critical requirement for approval of the SEC. This is a significant revelation considering many in the industry viewed the recent interactions as a positive sign for approval.
Thielen's argument focuses on two main aspects: political dynamics and compliance concerns. He believes that despite the potential benefits of a bitcoin ETF, such as easing access to the cryptocurrency in the US, SEC Chairman Gary Gensler remains skeptical. Gensler sees a need for stricter regulation in the cryptocurrency industry before greenlighting such products.
“SEC Chairman Gensler is not embracing crypto in the US, and it may even be very unlikely to expect him to vote to approve bitcoin spot ETFs,” Thielen stated. He added that approval could occur by the second quarter of 2024, but reiterated his expectation of rejection in January.
Gensler, in an interview with CNBC last month, expressed his concerns about the prevalence of fraud and bad actors in the cryptocurrency space. “There is a lot of non-compliance, not just with securities laws, but with other laws related to combating money laundering and protecting the public against bad actors,” declared the SEC chairman.
The cryptocurrency industry has been fighting for a spot bitcoin ETF for years. Large asset managers including BlackRock, Fidelity, Franklin Templeton, Valkyrie and VanEck are among the 14 awaiting the SEC's decision. If Thielen's prediction comes true, and the SEC rejects applications for spot bitcoin ETFs this month, he anticipates cascading liquidations, with the potential to reduce the bitcoin price by about 20%, bringing it into the $36.000 to $38.000 range.
Currently, Bitcoin (BTC) is trading at US$42.272,07, down 7% in the last 24 hours.
