What Happens to Bitcoin Price if Spot ETF Isn’t Approved?

Imagine this: the cryptocurrency world is eagerly awaiting the approval of a spot bitcoin Exchange-Traded Fund (ETF) by the U.S. Securities and Exchange Commission (SEC). The anticipation is high, with hopes of institutional acceptance and integration into mainstream financial systems.

But what if the ETF application is rejected? What would happen to the price of bitcoin?

The Short-Term Impact

Analysts predict that a rejection by the SEC would lead to negative short-term price action. Laurent Kssis, a crypto trading adviser at CEC Capital, believes that bitcoin could experience a downward move, possibly dropping below $30,000.

However, there are factors that could counterbalance the decline. Kssis mentions the approaching bitcoin halving, an event that decreases the rewards for miners. He believes that the halving, combined with other bullish catalysts, could prevent a significant plunge in price.

Martin Leinweber, a product strategist at MarketVector Indexes, sees the spot bitcoin ETF as a symbol of institutional acceptance. He acknowledges that a rejection would be a letdown for the market and might have legal consequences for the SEC.

Bitcoin's Resilience

Despite the potential negative impact, the rejection of a spot ETF does not spell doom for bitcoin. As a decentralized entity, bitcoin's existence is not dependent on an ETF. However, Leinweber admits that a rejection would cast a bearish shadow on bitcoin's price in the short term.

Leinweber suggests that without an ETF, the cryptocurrency market would need to adjust and forge a new narrative moving forward. This period of adjustment could create volatility but is not necessarily detrimental to the overall outlook of bitcoin.

The Ripple Effect

A failed spot bitcoin ETF approval would not only affect bitcoin but could also have repercussions for other crypto assets. Leinweber mentions that ether, the second-largest cryptocurrency, would likely be impacted as the SEC shifts its focus to spot ether ETF applications.

The Bullish Case

Samir Kerbage, the Chief Investment Officer at Hashdex, believes that even without an approved ETF, bitcoin's investment case remains strong. More investors are recognizing the benefits of bitcoin as a store-of-value asset and digital gold.

Kerbage points to the upcoming bitcoin halving as a potential catalyst for price appreciation. If history repeats itself, the scheduled reduction in supply could boost the price of BTC.

In conclusion, while the approval of a spot bitcoin ETF would undoubtedly be positive for the market, a rejection would not be the end of the world for bitcoin. The cryptocurrency has proven its resilience time and again, and its prospects remain solid with or without an ETF.