Following its explosive start this year, surging above the $45,000 price point, research from the crypto financial services platform Matrixport warns that Bitcoin, the world's largest crypto asset by market capitalization, could drop to as low as $36,000 if the U.S. Securities and Exchange Commission (SEC) rejects the spot Bitcoin exchange-traded fund (ETF) applications.
Titled "Why the SEC will REJECT Bitcoin Spot ETFs again," Matrixport's latest research, while acknowledging its prior forecast of Bitcoin rallying toward $50,000 by the end of January 2024, predicts that the SEC will "reject all proposals in January."
The study notes that despite several meetings between the major Wall Street regulator and hopeful spot Bitcoin ETF issuers, none of the applications meet the critical requirements for the commission's approval.
If the spot Bitcoin ETF proposals face rejection, Matrixport believes Bitcoin's value will plummet to as low as $36,000.
"We could see Bitcoin prices declining by -20% very quickly and falling back to the $36,000/$38,000 range," forecasts the research, adding, "If there is any denial by the SEC, we could see cascading liquidations as we expect most of the $5.1 billion in additional perpetual long Bitcoin futures to be unwound."
Apart from failing to meet the commission's critical requirements, the research highlights another major reason for the SEC's potential rejection of the spot Bitcoin ETF applications, involving politics and SEC Chairman Gary Gensler.
"The current five-person voting Commissioners leadership critical for the ETF approval of the SEC is dominated by Democrats," the research underlined. "SEC Chair Gensler is not embracing crypto in the US, and it might even be a very long shot to expect that he would vote to approve Bitcoin Spot ETFs. An ETF would certainly enable crypto overall to take off, and based on Gensler's comments in December 2023, he still sees this industry in need of more stringent compliance. From a political perspective, there is no reason to approve a Bitcoin Spot ETF that would legitimize Bitcoin as an alternative store of value."
In the event of SEC denial of the proposed Bitcoin investment vehicle, Matrixport projects that Bitcoin's price will surpass its value at the year's beginning, which stood at the $42,000 mark.
"Even if the SEC would deny the ETF, we still expect Bitcoin prices to be higher by the end of 2024 than when they started the year ($42,000), as US election years and Bitcoin mining years tend to be positive," notes the research.
Bitcoin was trading in the red zone at $42,242.03, with a 24-hour trading volume up by 16.19% at $45,961,496,902 as of 2:54 p.m. ET on Wednesday.
Bitcoin's latest price action represents a 6.48% plunge in its value on the day and a 2.02% loss in the last seven days.
Data from CoinMarketCap shows that Bitcoin's current circulating supply stands at 19,588,725 BTC and its market share is at $829,793,098,094.
