Bitcoin ETF Outlook: Matrixport, 10x Research Predict Rejection; Bloomberg Remains Hopeful

As the deadline approaches for the approval or rejection of the highly-anticipated Bitcoin ETF applications by major asset managers, a clash of predictions has emerged. 

With just two days remaining until the expected news from the US Securities and Exchange Commission (SEC), crypto investment services provider Matrixport and 10x Research expect the regulator to reject all applications for listing a spot Bitcoin ETF this month.

Bitcoin Price Dips 6% On Matrixport’s ETF Rejection Prediction

In a note released on Wednesday, Matrixport stated that all applications fall short of a critical requirement for SEC approval. While this requirement may be met by the second quarter of 2024, Matrixport anticipates that the SEC will reject all proposals in January. 

The current leadership of the SEC’s five-person voting Commissioners, critical for ETF approval, is dominated by Democrats, Matrixport notes. The firm believes that SEC Chair Gensler, known for his cautious approach to cryptocurrencies, may be unlikely to vote in favor of approving Bitcoin Spot ETFs.

Approving an ETF would propel the crypto market into a new era of adoption, acceptance, and legitimacy. However, Gensler’s comments in December 2023 indicated his belief that the industry still lacks stringent compliance measures. 

Matrixport further highlights that from a political standpoint, there may be little incentive to approve a Bitcoin Spot ETF that could legitimize Bitcoin as an alternative store of value.

Matrixport’s predictions caused a significant 6% drop in Bitcoin’s price, with the cryptocurrency falling to $40,800 after reaching a one-year high of $45,800 on Tuesday. 

Despite this, Bloomberg’s ETF expert remains optimistic about the SEC’s potential approval of these index funds within the predicted deadlines between January 5 and 10.

Conflicting Information On Bitcoin ETF Approval? 

In response to speculation raised by Matrixport and 10x Research’s report suggesting another wave of rejections for Bitcoin ETF applications, Erich Balchunas, Bloomberg’s ETF expert, expressed skepticism regarding these predictions.

The report from 10x Research echoes the sentiments of Matrixport, claiming that despite widespread anticipation for SEC approval of these index funds, they assert that all applicants must address a “crucial requirement” that has not been disclosed. 

10x Research believes that failure to fulfill this requirement will result in rejecting all Bitcoin ETF applications in January.

Interestingly, Balchunas mentioned that he had heard nothing to indicate anything other than approval of the Bitcoin ETF applications. Blommberg’s ETF expert questioned the sources behind 10x Research’s claims and noted that multiple mainstream news reporters with inside sources have indicated the likelihood of approval. 

While acknowledging that rejection is not impossible, Balchunas pointed out the significant amount of contradicting information it would overturn. Balchunas noted: 

People tagging me like crazy on this “rejection” report. We have heard nothing to indicate anything but approval but I want to give the guy benefit of doubt so I’m asking if he has any sources or if he just speculating. He seems to be Bitcoin bull and recently tweeted “executives” said approval likely. So unsure why he flipped. At this point saying SEC rejecting it isn’t just going against James Seyffart and I like it was in the early days, now you basically saying multiple mainstream news reporters w multiple sources on inside of this also have it wrong too. Not saying it’s imposs (again we still ‘only’ at 90%) but it overturns a LOT of good intel

After a temporary decline to the $40,800 level, Bitcoin has regained the $42,300 milestone. Sustaining this level of support is crucial for initiating a recovery, as it has proven to be significant in the past.

What is certain is that the outcome of the Bitcoin ETF applications submitted by major global asset managers is yet to be determined. 

The approval or rejection of these Bitcoin ETF applications will undoubtedly impact the price dynamics of the largest cryptocurrency, with the market eagerly awaiting the decision and its implications on Bitcoin’s price movement.

Featured image from Shutterstock, chart from TradingView.com