Skittish investors drove down the price of a host of altcoins this week, due in no small part to an alarming report from a crypto services firm. This analysis speculated that the hoped-for regulatory approval of the first spot cryptocurrency exchange-traded funds (ETFs) is not going to occur.
This dinged the prices of many coins and tokens, no matter how large and well established (or obscure and infrequently traded). Prominent altcoins Polygon (MATIC -3.34%), Uniswap (UNI -0.44%), and Litecoin (LTC 0.83%) -- to name only three -- really took it on the chin. According to data compiled by S&P Global Market Intelligence, the trio fell a respective 14%, 18%, and 12% over the course of the week.
The Matrixport analysis shook the crypto market
The analysis, published on Tuesday, was the latest weekly report of a crypto company known as Matrixport -- hardly a famous name even in the niche digital currency world. Its conclusions were contrarian and alarming, though, and as such they spread around the crypto community like a wildfire.
In that edition of its Matrix on Target digest, Matrixport said that it expected the U.S. Securities and Exchange Commission (SEC) to reject all of the numerous spot Bitcoin (BTC -2.33%) ETFs this month. It cited several reasons, mainly that SEC chief Gary Gensler continues to be resistant to approving cryptos and related investments generally.
Matrixport wrote of Gensler that "he still sees this industry in need of more stringent compliance."
Further, the firm opined, "From a political perspective, there is no reason to approve a Bitcoin spot ETF that would legitimize Bitcoin as an alternative store of value."
Although it overstated its case, Matrixpoint correctly pointed out that hopes for the first Bitcoin spot ETF approvals have been a force propelling the broader crypto market forward. Such instruments would allow investors to hold cryptocurrencies "wrapped" inside an easily tradable security. At the moment, ownership of even the most prominent coins and tokens can be complicated, cumbersome, and at times risky.
Will the SEC say yes or no?
Crypto spot ETF approval has been seen as the potential monster tide lifting all boats. So it stands to reason that the rejection Matrixport anticipates lowered the water level.
Bitcoin was slammed on Tuesday, and as often happens with a notable Bitcoin price movement, a great many altcoins tumbled, too. Quite a few have since recovered, but like the leading coin they haven't yet recovered to levels seen at the start of the week. This crypto spot ETF saga is getting interesting; the market will keep a sharp eye on how it develops.
