Detailed analysis by Matrix on Target suggests that despite optimistic expectations and meetings between applicants and the SEC, all Bitcoin ETF proposals are likely to be rejected in January due to failure to meet a critical requirement.
The report points out the political influence in the SEC, with a majority Democratic commission and a president, Gary Gensler, not very favorable to cryptocurrencies.
Gensler has expressed the need for greater regulatory compliance in the cryptocurrency industry and sees no reason to approve a Bitcoin ETF that could validate it as a legitimate value alternative.
Since September 2023, traders have bet on the approval of ETFs, injecting at least $14 billion in money flows and leverage into the cryptocurrency market.
However, if the SEC denies the proposals, a sell-off in Bitcoin futures contracts is expected, which could trigger a rapid price drop by 20%, retreating to a range of $36,000 to $38,000.
Given the uncertainty, Matrix on Target recommends traders protect their long positions by purchasing put options with a strike price of $40,000 by the end of January or consider short positions through Bitcoin options if approvals are not announced before January 5.
Despite this potential setback for ETFs, report insists on long-term bullish outlook for Bitcoin
Based on historical patterns from US election years and Bitcoin mining cycles, the price of Bitcoin is expected to surpass its starting point of $42,000 by the end of 2024, offering a positive note for investors despite the uncertainties current regulations.
Although the SEC’s denial of Bitcoin ETFs may trigger volatility and a momentary drop in price, the overall outlook for Bitcoin value maintains an optimistic long-term trajectory according to Matrix on Target analysis.