Bitcoin Spot ETF Proposals to Be Rejected by SEC: Matrixport

Crypto investment services provider Matrixport expects the U.S. Securities and Exchange Commission (SEC) to reject all applications to list a spot bitcoin exchange-traded fund (ETF) this month.

"The current five-person voting Commissioners leadership critical for the ETF approval of the SEC is dominated by Democrats," wrote the firm in a note on Wednesday. "SEC Chair Gensler is not embracing crypto in the U.S., and it might even be a very long shot to expect that he would vote to approve bitcoin spot ETFs."

"An ETF would certainly enable crypto overall to take off, and based on Gensler’s comments in December 2023, he still sees this industry in need of more stringent compliance," Matrixport continued. "From a political perspective, there is no reason to approve a bitcoin spot ETF that would legitimize Bitcoin as an alternative store of value."

The widely-anticipated approval of a spot BTC ETF in the U.S. helped drive bitcoin to prices not seen since April 2022 as it closed 2023 up nearly 160% on the year.

Matrixport estimates that of the extra $14 billion of fiat and leverage deployed into crypto since September, $10 billion might be related to ETF expectation.

BTC is currently down nearly 7% on the day at $42.445, with the entirely of that decline coming in the space of a few minutes around 12:00 UTC.

Galaxy Digital Head of Research Alex Thorn took serious issue with the Matrixport report, calling it "bewildering" and "nonsensical." Galaxy, in partnership with Invesco, is among the more than dozen firms who have applications with the SEC for a spot bitcoin ETF.

Read More: Matrixport's $45K End of Year Target for Bitcoin Looks to Be Accurate

Updated at 17:00 UTC: Includes reaction from Galaxy's Thorn.