Bulls Beware! Bitcoin Faces 20% Price Dive if SEC Rejects Spot ETFs, Matrixport Warns

In the crypto world, predictions and forecasts carry weight! That’s exactly what Matrixport, a top-tier crypto finance platform, has come out with. Their recent report suggests that the U.S. Securities and Exchange Commission (SEC) might turn down the Bitcoin Spot ETFs once more.

If their analysis is accurate, we could see a Bitcoin price drop of approximately 20%, settling between $36,000 and $38,000.

The SEC’s Stance on Bitcoin ETFs

According to the latest report from Matrixport, the chances of the SEC denying approval for Bitcoin Spot ETFs, challenge the high expectations within the crypto community. 

Matrixport foresees a series of reactions if the SEC denies the ETF. Specifically, they anticipate significant selling, especially among the $5.1 billion of perpetual long Bitcoin futures. This selling pressure could lead to a 20% decline in Bitcoin prices, bringing them back to the $36,000-$38,000 range.

As the January 5, 2024, deadline nears without positive signs, Matrix on Target offers strategic advice for traders. Their suggested approach includes hedging long positions with $40,000 strike puts for January’s end or even exploring short positions in Bitcoin using options.

Also Read: SEC Approval for Spot Bitcoin ETFs Will Be a Political Necessity: TD Cowen

Potential Risks of ETF Approval

While many expect the approval of a Bitcoin ETF to spark price spikes, Matrixport’s insight sparks a discussion regarding a price correction. However, concerns are raised about the ETF becoming a target for short sellers, potentially leading to increased volatility or even transforming into a “sell the news event.

If the Bitcoin ETF gets the green light, it could invite increased regulatory scrutiny. This might lead to stricter taxation, enhanced reporting requirements, and possible restrictions on Bitcoin use, affecting investor sentiment.

Read More: Are People Against Bitcoin Spot ETFs? Public Feedback Rolls In as SEC Approval Looms

Comparisons to Past Events

Some market analysts compare the current situation to 2017 when the Winklevoss Bitcoin ETF was rejected. They suggest that the market might have already priced in the possibility of ETF approval, and a denial could lead to disappointment.

The crypto community is eagerly awaiting the SEC’s final decision. Whatever the outcome, it will undoubtedly influence Bitcoin’s trajectory in the coming days.