Bitcoin Spot ETF Proposals in Jeopardy? Matrixport Raises Concerns Over US SEC's Decision

Bitcoin Spot ETF Proposals in Jeopardy? Matrixport Raises Concerns Over US SEC’s Decision

Time Stamp: January 5, 2024 1:45 AM
  • Bitcoin Spot ETFs are exchange-traded funds that track the value of Bitcoin and trade on traditional market exchanges rather than crypto exchanges.
  • According to Matrixport, the US SEC has more reasons and causes to reject the Bitcoin Spot ETF proposal than to approve it.
  • The firm has estimated that with the extra $14 billion of fiat and leverage deployed into crypto since September, $10 billion might be related to ETF expectations. 

As the crypto market 2024 settles in, many crypto enthusiasts are anticipating one of the highest moments in crypto history: the 2024 bull run. The 2023 crypto year was a trying time as the industry faced numerous hurdles. From the after-effect of the 2022 crypto crash to the content border of crypto lawsuits, 2023 was a trying year for the entire industry.

 Fortunately, as the year ended, the industry regained its momentum, showcasing a tremendous rise in value. Bitcoin went from its all-time low of $15,000 and now stands at 42,988.30 at the time of writing. However, the fundamental functioning of the crypto industry heavily relies on its supply and demand, which in turn depends on various events and news coverage.

 For instance, a single article on FTX kickstarted one of the greatest crypto crashes since the Mt Gox hack. Information is the core element on which the crypto market 2024 hinges. Amid this, the Bitcoin ETF case will play a vital role in deciding the trajectory of Bitcoin.

The US SEC’s decision regarding its approval may open doors for bigger investments in the crypto industry. Unfortunately, many experts and analysts have hinted at the possibility of another loss for the industry. According to Matrixport, a renowned crypto investment service provider, the US SEC may reject all Bitcoin Spot ETF proposals. If this prediction is accurate, it would significantly set back the industry’s momentum.

The history behind the Bitcoin Spot ETF Proposals

Over the years, cryptocurrency has evolved from the basic functionalities of Bitcoin into entirely new financial systems. Over the years, through the vast success of the crypto coins, we have witnessed the development of CBDCs, stablecoins, meme-coins, and thousands of altcoins utilizing different consensus mechanisms. This rapid evolution of digital assets came about through the drive of a single vision: the global adoption of cryptocurrency. This eventually led to the development of a redefining concept, the Bitcoin Spot ETFs. 

Generally, Bitcoin Spot ETFs are exchange-traded funds that track the value of Bitcoin and trade on traditional market exchanges rather than crypto exchanges. This allows investors to enter the crypto sphere without going through the hustle of crypto exchanges while still providing leverage to its price. Currently, there are several ETFs available, ranging from commodities to currencies.

Also, Read Crypto Predictions 2024: Bitcoin’s Ascent, Ethereum’s Rally, and BNB’s Resilience.

A Bitcoin Spot ETF would securely hold Bitcoins in a digital vault, which registered custodians manage. These ETFs would mirror the price of Bitcoin in the crypto market but would highlight several advantages. For instance, it alleviates the hustle most newbie traders have when trying to learn how Bitcoin works and having to sign up for a crypto exchange.

Bitcoin-spot-etfBitcoin-spot-etf

A Bitcoin spot ETF is an investment vehicle that allows ordinary investors exposure to the price moves of Bitcoin in their regular brokerage accounts.[Photo/Investopedia]

A Bitcoin spot ETF is an investment vehicle that allows ordinary investors exposure to the price moves of Bitcoin in their regular brokerage accounts.[Photo/Investopedia]Furthermore, Bitcoin Spot ETFs are not limited to just the crypto coin. It can hold more than one asset, like different stocks, allowing investors to mitigate risk and diversify their portfolios. In addition, Bitcoin has issues with regulations, although a Bitcoin Spot ETF is designed to work under similar various laws and is eligible for tax.

Unfortunately, they also offer a wide range of risks, forcing the US SEC to recent most Bitcoin Spot ETF proposals. For instance, ETFs offer the risk of inaccuracy. Since it tacts the price of the name and multiple assets, it may inaccurately reflect its value. If Bitcoin’s price were to rise by 50%, its ETF may not accurately reflect it. 

In addition, a Bitcoin Spot ETF can hold multiple assets but not multiple crypto coins. In addition, Bitcoin Spot ETFs forgo the standard benefits Bitcoin has. It generally makes the ultimate trade-off by compromising its decentralized nature for its adoptive rate.

Matrixport hints at a rejected Bitcoin Spot Proposal.

The entire industry has been in a frenzy behind the Bitcoin Spot ETFs proposal since it will significantly affect Bitcoin’s value. Currently, due to the high anticipation of its approval, its value skyrocketed. Unfortunately, not all are expecting such a positive outcome for the case. 

According to Matrixport, a renowned crypto investment service provider, the US SEC has more reasons and causes to reject the Bitcoin Spot ETF proposal than to approve it. 

In a comment, the firm wrote, “The current five-person voting Commissioners leadership critical for the ETF approval of the SEC is dominated by Democrats. SEC Chair Gensler is not embracing crypto in the US, and it might even be a very long shot to expect that he would vote to approve Bitcoin spot ETFs. This might be fulfilled by Q2 2024, but we expect the SEC to reject all proposals in January.” 

Matrixport continued, “An ETF would certainly enable crypto overall to take off, and based on Gensler’s comments in December 2023, he still sees this industry needing more stringent compliance. 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, Read The Crypto Wealth Surge: Bitcoin Millionaire Wallets Hit New Highs in 2023.

The widely anticipated case is estimated to present an astounding rise in Bitcoin’s price, giving investors and organizations leeway to invest heavily in the crypto market in 2024. The firm has estimated that with the extra $14 billion of fiat and leverage deployed into crypto since September, $10 billion might be related to ETF expectations. 

Despite this warning, not everyone expects such a grim outcome. Galaxy Digital Head of Research Alex Thorn stated that the report is nonsensical. Alex has stated that the Galaxy, alongside more than a dozen firms, expects a positive outcome for the case, shifting to a grander adoption rate.

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