Bitcoin Faces Setback as SEC ETF Rumors Trigger Market Decline

In the volatile world of cryptocurrency, Bitcoin faces setback as unconfirmed reports surrounding the potential rejection of exchange-traded fund (ETF) applications by U.S. securities regulators cast a shadow on the market. This uncertainty has led to a 4.63% drop in Bitcoin’s value, settling at $43,069.3 by 06:11 ET.

Highlights:

• Bitcoin Faces Setback with 4.63% decline, settling at $43,069.3, fueled by unconfirmed reports hinting at potential SEC rejection of ETF applications.
• AllianceBernstein analysts attribute Wednesday’s 7% Bitcoin drop to Matrixport’s report, suggesting SEC Chair Gensler’s skepticism towards approving Bitcoin spot ETFs.
• The SEC faces a pivotal decision by January 10 on Ark and 21 Shares’ spot ETF application, setting the stage for potential precedents in the cryptocurrency market.
• Amidst the uncertainty, Goldman Sachs is reportedly in talks to become an authorized participant for potential spot Bitcoin ETF funds from BlackRock and Grayscale.

Bitcoin Faces Setback on Wednesday

Bitcoin encountered a significant downturn on Wednesday, witnessing a 7% decline from its recent peak of $45,922 on Jan. 2. Analysts from AllianceBernstein attribute this correction to concerns arising from a Matrixport report, suggesting that SEC Chair Gary Gensler may not be inclined to approve Bitcoin spot ETFs.

Read more: How to Use the Bitcoin ETF to Become a Millionaire in 2024?

Matrixport’s Assessment

Markus Thielen, Head of Research at Matrixport, emphasizes a potential deficiency in the ETF applications, indicating a critical requirement shortfall. Thielen underscores Gensler’s cautious approach to the crypto market, suggesting that the approval of Bitcoin spot ETFs might face substantial challenges.

SEC’s Deadline and Potential Precedent

The SEC faces a crucial decision by January 10, either approving or rejecting a spot ETF application from Ark and 21 Shares. This ruling could serve as a precedent for other ETF applications, notably including one from the industry giant BlackRock. Intriguingly, Goldman Sachs is reportedly exploring the role of an authorized participant for potential spot Bitcoin ETF funds from BlackRock and Grayscale.

Speculation and Market Dynamics

Speculation surrounding SEC approval has been a driving force behind Bitcoin’s impressive 100% surge in 2023. Advocates argue that a green light for a spot ETF would attract substantial capital, enabling traders to engage without directly holding cryptocurrency. However, analysts caution that recent industry scandals and the impact of elevated interest rates may temper the expected bullish rally.

SEC’s Historical Stance

Over the past two years, the SEC has consistently rejected spot Bitcoin ETF applications, citing concerns related to the token’s decentralized and volatile nature. Notably, all U.S.-traded Bitcoin ETFs currently track futures traded on the Chicago Mercantile Exchange.

Conclusion

As Bitcoin faces a setback amid speculations and regulatory uncertainties, AllianceBernstein analysts remain optimistic. Viewing the current dip as strategic buying opportunities for Bitcoin and Bitcoin miners, they anticipate a significant market rebound upon the actual approval of the ETF, emphasizing a positive outlook despite prevailing challenges. Stay tuned as the crypto market navigates this period of uncertainty.

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