Bitcoin rebounded on Thursday, reclaiming losses incurred earlier in the session. As of 10:19 ET (15:20 GMT), Bitcoin saw a gain of 3.90%, reaching $43,874.4. The recovery follows a sharp drop on Wednesday that saw its value decrease by as much as 7% from the year’s high of $45,922 on Jan. 2.
Analysts at AllianceBernstein attributed the coin’s correction to a report from independent crypto trading firm Matrixport regarding the potential approval of a Bitcoin spot ETF by the U.S. Securities and Exchange Commission (SEC). According to Markus Thielen, Head of Research at Matrixport, the ETF applications are likely to be denied due to falling short of a “critical requirement.” Thielen expressed skepticism about SEC Chair Gary Gensler’s inclination to embrace crypto, making the approval of Bitcoin spot ETFs a challenging prospect.
The SEC faces a January 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares, which could set a precedent for similar applications from other fund managers, including BlackRock. Goldman Sachs is reportedly in talks to be an authorized participant for the potential spot Bitcoin ETF funds of both BlackRock and Grayscale.
While speculation about the ETF approval had fueled a more than 100% surge in Bitcoin in 2023, analysts caution that the approval may not trigger as substantial a bull run as anticipated. Recent scandals and elevated interest rates have impacted retail investors’ enthusiasm for the crypto industry.
The SEC has consistently rejected applications for a spot bitcoin ETF over the past two years, citing concerns about the token’s decentralized and volatile nature. Currently, all U.S.-traded bitcoin ETFs track the futures of the token, traded on the Chicago Mercantile Exchange.
AllianceBernstein analysts advised that price dips related to the ETF are market opportunities to buy Bitcoin and Bitcoin miners, predicting a significant market bounce upon actual approval.
