SEC’s ETF Rejection Streak? Matrixport Anticipates a Full Sweep This Month

• Bitcoin falls 8% on expectations of SEC rejection of ETFs, triggering $500 million in derivatives liquidation.

• Political influence and stringent SEC regulation negatively impact the cryptocurrency market, generating uncertainty and volatility.

The market is going through a time of uncertainty and volatility, especially with regard to Bitcoin. Recently, the Bitcoin market experienced a significant drop, losing 8% of its value in a single day.

This situation has been exacerbated by expectations surrounding the approval of a spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC). Let’s analyze in detail the causes and consequences of this financial setback.

Uncertainty Surrounds Bitcoin

The pullback in Bitcoin’s value not only erased the gains made in early January, but also triggered the liquidation of $500 million in positions on derivatives exchanges. But what is driving this wave of uncertainty? The answer seems to lie in the expectation of SEC decisions.

UPDATE Bitcoin price dumped 9% in 1 hour on the basis of a report by Matrixport predicting an SEC rejection of ALL Bitcoin ETF applications.

Their justification? Politics.

– 5 voting commissioners are Democrats.
– Democrats don't like 'crypto'.
– Applicants haven't satisfied… pic.twitter.com/v6oD7zwPj7

— Bitcoin Archive (@BTC_Archive) January 3, 2024

The SEC’s role in this scenario is not minor. Under the leadership of Gary Gensler, the SEC has taken a cautious and strict approach toward cryptocurrency regulation. The anticipation of a possible rejection of spot Bitcoin ETFs has injected a dose of pessimism into the market.

Investors, aware of the potential regulatory challenges, are re-evaluating their positions, which has led to a reduction in open interest and exposure in both long and short positions.

Political Influence and Compliance Issues

The influence of internal SEC politics is also a crucial factor. With a Democratic majority on the panel, stricter regulation and more rigorous oversight of cryptocurrencies is expected. This political atmosphere adds an additional layer of complexity to the market, affecting investor confidence and market trends.

Market Reaction and Future Expectations

In the face of these developments, the market reaction has been one of caution and caution. The upcoming SEC decision is critical and could have far-reaching implications for the cryptocurrency market. Investors are watching closely, taking a cautious approach that has contributed to the current market decline.

Matrix on Target projects a January rejection for Bitcoin Spot ETFs by the SEC, cautioning traders to hedge long exposure. With #SEC Chair Gensler’s skepticism towards #crypto, a potential -20% #Bitcoin price drop is anticipated upon #ETF denial, though a positive end-of-2024… pic.twitter.com/IgaMhBJtiP

— Matrixport (@realMatrixport) January 3, 2024

Matrixport’s recent report sheds some light on the reasons behind the current Bitcoin market slump . Factors such as the expected SEC decision, political dynamics and regulatory uncertainties are influencing the bearish market trend. However, there is a glimmer of hope on the horizon, as the report suggests a possible long-term recovery and growth.

Diverse Market Views

Scott Melker, trader, analyst and podcast host, expressed his bewilderment about Matrixport’s outlook. To him, the logic behind this view is unclear. Joe Carlasare, a crypto-focused litigator, offered a different perspective.

This is the “reason” for the dump.

I put reason in quotes, because this is really just a leverage flush.

Regardless, this is an OPINION with zero new information that flies in the face of everything shared by experts.

Are you guys that skittish? pic.twitter.com/inqMvPrb8r

— The Wolf Of All Streets (@scottmelker) January 3, 2024

In his tweet with his followers on X (formerly Twitter), he noted that the Bitcoin selloff was not due to “some silly report about ETF denial.” In his view, the market was simply overbought, and “nothing goes up in a straight line.”

The Reality of the Market and Settlements

This view aligns with the idea that the crypto market, like any other financial market, is subject to cycles of corrections and adjustments. The liquidations seen on the day of the crash, from this perspective, are normal and expected phenomena in a Bitcoin bull market.

This suggests that, beyond specific news and regulatory decisions, market dynamics and investment cycles play a crucial role in determining prices.

What does the future hold?

As the cryptocurrency market navigates these turbulent waters, one question remains: how will investors and the market in general adapt to these new regulatory and political realities? The answer to this question will be crucial to understanding the future trajectory of Bitcoin and other cryptocurrencies.