The cryptocurrency market started January on a positive note but was recently jolted by a sudden price drop. The SEC’s rejection of ETF applications, with an indication of potential approval in the second quarter, as reported by Matrixport, deflated the inflated demand. Bitcoin (BTC) is now trading at $42,500, marking a 6.5% loss for the day. Veteran analyst Peter Schiff’s expectations are in focus.
Optimism for the first U.S.-based spot Bitcoin ETF approval has turned into pessimism with unclear origins. The price of Bitcoin fell to $40,750 following social media speculation about a possible second-quarter approval. Schiff, a long-time analyst and Bitcoin critic, issued a new warning.
On social media, Schiff suggested that the introduction of spot Bitcoin ETFs could have a disastrous effect on BTC prices. He stated that the promise of a U.S.-listed spot Bitcoin ETF has supported Bitcoin’s price and speculative demand for years. If the expected institutional demand fails to materialize, the narrative could reverse, leading to a painful decline.
Schiff has long sparked debates over the value of Bitcoin and other cryptocurrencies. He believes Bitcoin should have vanished by now, but its price has continued to prove him wrong. His negative comments, including the one above, often draw the ire of the crypto community.
The notion that ETFs would not attract demand after approval seems illogical, given the positive data from futures ETF volumes. Furthermore, it would be nonsensical for trillion-dollar asset managers like BlackRock to invest so much money and time in a product that wouldn’t attract demand. They are already spending on advertising and keeping commission rates low in a competitive race.
What does Peter see that the trillion-dollar giants don’t? Short-term Bitcoin price volatility could be driven by a “buy the rumor, sell the news” scenario if approval is granted, or disappointment if it’s not. Matrixport has already simulated the disappointment drop. The SEC has until January 10th to decide, with the anticipated date being between January 8th and 10th.
If ETFs are unexpectedly rejected or fail to generate the expected volumes after approval, cryptocurrencies could fall. Conversely, if approved, an increase in institutional demand could lead to a shortage in supply, potentially driving even more interest in the market.