Illustration by Mitchell Preffer for Decrypt
ETF fever has taken over the body of crypto—and now appears to have a grip on markets and discourse so all-consuming that it likely won’t let up until the verdict is in.
This week on Crypto Twitter, already heated speculation about the eagerly anticipated financial product reached new highs, as rumors and predictions rattled both spirits and crypto prices.
The big shock to the system came Wednesday, when an ominous report from digital asset manager Matrixport prophesied that the Securities and Exchange Commission (SEC) would reject all spot Bitcoin ETF applications in January.
MatrixPort, a firm that I’ve never heard of comes out and says that (in their view) the spot #Bitcoin ETFs won’t be approved by the SEC this month.
They are one firm. They might be right. They might be wrong.
This report is causing this selloff in #Bitcoin this morning. pic.twitter.com/K8UMifAsOY
— Caleb Franzen (@CalebFranzen) January 3, 2024
Almost instantly, BTC took a nosedive, shedding over 7% and dropping below $42,000 in a matter of hours. Clearly, the Bitcoin market is breathlessly hinging on any signal related to the ETF’s prospects, and not without reason: the financial product, which would allow traditional finance institutions and investors to gain exposure to BTC without holding any cryptocurrency, could interconnect over $14 trillion worth of the U.S. economy with Bitcoin.
Experts were quick to swat back against the Matrixport paper, though, deriding it as based on improper sourcing and faulty analysis. Such analysts remained overwhelmingly confident that a Bitcoin ETF will be approved this month.
At this point saying SEC rejecting it isn’t just going against @JSeyff and I like it was in the early days, now you basically saying multiple mainstream news reporters w multiple sources on inside of this also have it wrong too. Not saying it’s imposs (again we still ‘only’ at…
— Eric Balchunas (@EricBalchunas) January 3, 2024
Calmed by those reassurances, BTC quickly rebounded back to pre-Matrixport levels.
“Sir, the Matrixport report brought #Bitcoin down by $5k temporarily. It is now back at $43k.”
“Ok so what’s next. Approval is imminent we need to get lower!”
“Next sir? We expected a much larger dip but the hodlers don’t scare easily. In fact they bought more” pic.twitter.com/kfnWvyLLU3
— EricOfRivia⚡️ (@EricOfRivia) January 3, 2024
Perhaps after all that tumult, desperate for a reprieve from all the ups and downs, many Crypto Twitter denizens began clinging yesterday to a rumor that the SEC was set to approve its first Bitcoin ETF on Friday.
expecting something tomorrow
— Jacquelyn Melinek (@jacqmelinek) January 4, 2024
going to sleep. Hope a spot bitcoin ETF is approved when I wake up
— borovik.eth (@3orovik) January 5, 2024
Alas, though, the respite never came. While all hopeful Bitcoin ETF applicants submitted revised applications, the SEC had nothing to announce, leaving many in crypto disappointingly set for another weekend of nail-biting uncertainty.
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