© Reuters
Investing.com rose on Thursday, erasing losses recorded earlier in the session.
As of 10:19 ET (15:20 GMT), Bitcoin had gained 3.90% to $43,874.4.
The world’s best-known cryptocurrency had fallen sharply on Wednesday, dragging its value down as much as 7% from a year’s high of $45,922 hit on January 2.
Analysts at AllianceBernstein (NYSE 🙂 said the currency correction was due to a report from independent cryptocurrency trading firm Matrixport on the possible approval of a Bitcoin spot ETF by the US Securities and Exchange Commission. US (SEC).
In a note, Matrixport head of research Markus Thielen argued that ETF applications will likely be rejected because they do not meet a “critical requirement.” Thielen added that SEC Chairman Gary Gensler “is not embracing cryptocurrencies in the US, and it might even be a long shot to expect him to vote to approve Bitcoin spot ETFs.”
According to Reuters, the SEC has a deadline of January 10 to approve or reject a spot ETF application from Ark and 21 Shares. The ruling could set the precedent for a number of current ETF applications from several other fund managers for a similar product, including one from the world’s largest asset manager, BlackRock (NYSE:).
Goldman Sachs is also in talks to be an authorized participant for potential BlackRock and Grayscale spot Bitcoin ETF funds, CoinDesk reported Wednesday.
Speculation that the offerings would get the green light from the SEC partly fueled a more than 100% surge in Bitcoin in 2023. Proponents argue that the approval of a spot ETF will trigger a flood of capital inflows into Bitcoin, given that The product allows traders to invest in the token without directly holding cryptocurrency.
Analysts have warned that the approval may not trigger as big a bull run as expected, particularly in the wake of a series of recent scandals that have dampened retail investor interest in the crypto industry. Meanwhile, high interest rates have also limited the amount of capital flowing into cryptocurrencies.
The SEC has repeatedly rejected applications for a spot bitcoin ETF over the past two years, citing concerns that the decentralized and volatile nature of the token will prevent fund managers from protecting investors against market manipulation. Currently, all U.S.-traded bitcoin ETFs track the token’s futures, which trade on the Chicago Mercantile Exchange.
“We continue to maintain that all ETF price drops are market opportunities to buy Bitcoin/Bitcoin miners, and the market will likely rebound materially on the actual approval event,” AllianceBernstein analysts said.
