- The crypto market suffered a steep decline as a Matrixport report suggested that the SEC could delay the approval of spot Bitcoin ETFs in the US
- The report triggered a widespread liquidation event that resulted in the crypto market losing over $540 million in value, with the meme token market plunging over 11%
- Crypto enthusiasts were expecting the SEC to green-light the first batch of Bitcoin-focused exchange-traded products before January 10. Speculation of the event led to the leading cryptocurrency hitting $45,000 for the first time in 2 years
The cryptocurrency market lost over $540 million in value following the release of a scathing new report by Matrixport that explained how the US Securities and Exchange Commission (SEC) could reject all Bitcoin spot ETF applications for the time being.
The report triggered a massive four-hour liquidation event in the market that saw leading cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) dipping nearly 10%. The liquidation event had a profound effect on the meme coin market as all major meme-based cryptocurrencies lost over 11% in value.
Crypto Market Declines Following Report That The SEC Could Reject Bitcoin ETF Applications
Dogecoin (DOGE), the leading meme coin, was hit the worst, dropping from $0.090 to $0.0819 in just 15 minutes, but the token somewhat managed to recover later in the day. Shiba Inu (SHIB) also declined by over 10% but was saved by its December rally which resulted in the token increasing 8% in overall value over 30 days.
Meanwhile, BONK, the newest and most trending meme token in the market, lost nearly 16%. The Solana-based meme cryptocurrency’s decline starkly contrasted with its recent performance, which saw it reach an all-time high of $0.0000341. However, BONK is currently trading over 64% below the peak it reached less than three weeks ago.
While the crypto market fell by 4.9%, the market cap of meme tokens plunged by nearly 11.5%, which is more than double the average.
In the report, Matrixport analysts predicted that the SEC would be approving all spot Bitcoin ETF applications in the second quarter of 2024, and as a result, the price of BTC would fall between $36,000 and $38,000 in January. They also recommended investors to either buy put options or cash out their Bitcoin holdings before the market tumbles.
SEC Chairman Gary Gensler Strongly Opposed To Crypto And Bitcoin Spot ETFs
The experts also highlighted that the current five-member commissioner leadership of the SEC, which is critical for any ETFs to be approved, is dominated by the Democrats who are widely opposed to cryptocurrencies. Moreover, Gary Gensler, chairman of the Commission, does not support crypto assets and wants them banned. He has called for compliance from an industry that according to him is “rife with fraud”.
Therefore, there is no reason to expect a vote from Gensler to approve spot Bitcoin ETFs in the United States, said the report.
The analysts further state that “from a political perspective, there is no reason to approve a Bitcoin Spot ETF that would legitimize Bitcoin as an alternative store of value”. Also adding that since traders started betting on the potential approval of the BTC-focused funds in September 2023, at least $14 billion worth of extra fiat and leverage has been deployed into the crypto market.
Despite the bleak prospects, crypto experts still believe that two main catalysts could propel the price of BTC to new highs by the end of the year, one being the Bitcoin halving event in April and the other the US presidential election come November.
The crypto community is eagerly awaiting the first batch of Bitcoin spot ETFs to be approved by the SEC before the January 10 deadline. The positive market sentiment associated with what will be a historic event for the crypto market led to the price of Bitcoin crossing the $45,000 mark for the first time since April 2022.
At the time of writing, Bitcoin (BTC) is trading at $43,254 – down 4.4% in the last 24 hours.