Analyst Warns of Potential Crypto Market Turmoil If SEC Rejects Bitcoin ETF

The cryptocurrency community is in a state of heightened anticipation as the U.S. Securities and Exchange Commission (SEC) edges closer to a pivotal decision on approving physically-backed Bitcoin exchange-traded funds (ETFs). Still reeling from the FTX exchange collapse in 2022, the industry braces for a make-or-break moment with emotions running high. 

Can SEC Deny ETF’s, Analyst Decodes the Looming Danger

While everyone is rooting for the approval and a $100 Billion at stake, analyst Nate Geraci has warned the community of the impending dangers, suggesting a potential market upheaval if the ETF fails to secure approval. Despite the palpable tension, there’s a steadfast belief among some, including Geraci, that the SEC might give the go-ahead.

This impending decision, slated for next month, could redefine how cryptocurrencies integrate into traditional finance, marking a pivotal moment for both realms. The recent surge in Bitcoin’s value, hitting $45,000, hinges on the expectation of ETF approval, especially significant after the setbacks following the FTX exchange collapse. Wall Street giants, such as Cathie Wood’s ARK Investment and others, eagerly await the SEC’s nod.

Gensler’s Response to ETF’s Approval

SEC Chair Gary Gensler recently disclosed that the SEC is closely examining eight to twelve ETF applications, adding suspense to the regulatory scene. In an interview with CNBC, Gensler expressed substantial concerns about compliance in the cryptocurrency realm. He highlighted worries about adherence to securities laws, anti-money laundering rules, and the necessity to safeguard against illicit activities in the industry. Gensler criticized commingling practices seen in crypto exchanges, emphasizing activities that wouldn’t be allowed in traditional financial systems. 

In a recent move, the court rejected the SEC’s reasoning for denial (fears of Bitcoin price manipulation) but still greenlit the futures product. Analysts now estimate an 80% chance of approval, with Blackrock’s filing holding significant influence. Additionally, the introduction of a proposed bill for government oversight on stablecoin flows has stirred interest. This new proposal sparks concerns about ETF approval, contributing to the evolving crypto narrative.

Crypto Reaction

Jan Van Eck, CEO of VanEck, predicts that all ETFs will receive approval simultaneously. He anticipates a price surge of $10,000 to $15,000 on the approval day. The excitement builds as early January approaches rapidly. Demand for digital asset investment products surged, hitting a record high of $26.5 billion in February 2022 in terms of assets under management.