Author: Markus Thielen, Research Director, Matrixport Source: matrixport Translation: Shan Oppa, Golden Finance
Matrix on Target is bullish on the market in 2023, predicting at the beginning of the year that Bitcoin could reach $45,000 before Christmas. If all SEC requirements for a BTC spot ETF are met, we even predict that Bitcoin could surge to $50,000 by the end of January 2024. However,we believe the SEC may reject all BTC spot ETF proposals in January.
ItIt is unlikely that the current five-member SEC voting committee leadership, dominated by Democrats, will approve a bill to legalize Bitcoin. ETFs that reserve value for alternatives. This is because ETFs will definitely allow cryptocurrencies as a whole to take off, and based on Gensler’s comments in December 2023, he believes the industry needs stricter compliance. From a political perspective, there is no reason to approve a Bitcoin spot ETF, as this would make Bitcoin a legitimate alternative to store value.
Since traders began betting on ETF approval in September 2023,at least $14 billion in additional fiat and leverage has flowed into cryptocurrencies . Some of these inflows may be related to an easing of macro conditions as the Fed turns dovish. However, of that $14 billion in additional longs, $10 billion may be tied to expectations of ETF approval.
If the SEC vetoes, we may see a cascade of liquidations as we expect at least $5.1 billion in additional perpetual long Bitcoin futures to be liquidated. Bitcoin price could quickly drop 20% back to the $36,000/$38,000 range.
Assume that market participants do not hear any news of the approval before Friday, January 5, 2024. In this case, Matrix on Target recommends traders hedge their long positions by purchasing late-January $40,000 strike price puts, or even short Bitcoin directly through options. Even if the SEC rejects the ETF, we still expect Bitcoin prices to be higher at the end of 2024 than at the beginning of this year ($42,000) as US election years and Bitcoin mining years tend to be positive.
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