Lyllah Ledesma is a CoinDesk Markets reporter currently based in Europe. She holds bitcoin, ether and small amounts of other crypto assets.
It's not surprising that analysts expect to see negative short-term price action if a bitcoin spot ETF is rejected by the SEC.While markets appear to have fully embraced the idea that the U.S. Securities and Exchange Commission will approve a spot bitcoin ETF , it's worth considering the chance of continued rejections and what that might mean for the price of the crypto.
“We could see a move downward and the target could be below $30,000,” said Laurent Kssis, a crypto trading adviser at CEC Capital.. “A cluster at $25,000 is highly unlikely unless the SEC is categorical, but I sense it will be a back-to-the-drawing-board situation and hope will still be in the back of everyone's mind.”
Leinweber added that a rejection might also trigger some legal turmoil for the SEC, which in June suffered a major court lossthe agency was"arbitrary and capricious" in its rejection of Grayscale's attempt to convert its Bitcoin Trust into a spot ETF. The SEC in October notably failed to appeal the ruling, helping to lead to current expectations of coming approvals.
“I believe that the absence of an ETF would impose a substantial drag on the crypto market," he said."It would necessitate a period of adjustment and realignment, as the market would need to decouple and forge a new narrative moving forward."would likely not be immune to these repercussions, according to Leinweber, especially considering that the SEC would next shift its focus to the spot ether ETF applications.
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