Bitcoin Could Rally to $50K as Gensler Faces Pressure to Approve ETF, Traders Say

Bitcoin [BTC] traded just above $43,000 in European morning hours Thursday, recovering some losses after a leverage flush sent it down as much as 7% on Wednesday as markets reacted to analyst reports.

The largest cryptocurrency could rally to as high as $50,000 this month, said Lucas Kiely, the chief investment officer of wealth platform Yield App. Kiely said he expects the U.S. Securities and Exchange Commission (SEC) to approve a spot bitcoin exchange-traded fund (ETF), dismissing analysis that indicated it will not.

Major tokens solana [SOL], ether [ETH] and Cardano’s ADA started to stabilize early Thursday after dropping more than 10% in the past 24 hours. The CoinDesk Market Index (CMI), a broad-based gauge tracking the market, slumped 6% in the same period, its biggest loss in recent weeks.

Meme coins dogecoin [DOGE] and shiba inu [SHIB] fell more than 12%. Sei Network’s SEI was one of the few gainers, bolstered by rising hype.

A futures unwinding late on Wednesday caused upward of $600 million in liquidations – the most in a year – while open interest, or the number of unsettled futures contracts, fell by $5 billion, the steepest drop in recent months.

$5 billion in open interest wiped out from the #crypto market !!! pic.twitter.com/ATB7Ai2bzE

— Coinalyze (@coinalyzetool) January 3, 2024

Wednesday's dump started at the same time research firm Matrixport said it expected "the SEC to reject all proposals in January" for a spot bitcoin ETF. Options analyst GreeksLive shared the outlook, saying that "weakness in crypto mining stocks, and the sell-off in several crypto-related U.S. stocks" had reinforced the market's skepticism.

Yield App's Kiely took the opposite position, telling CoinDesk in an email that reports that the SEC won’t approve a bitcoin spot ETF this month should be ignored.

"I think it’s still likely that we see an approval from the SEC in January," Keily said. "There is too much pressure and expectation from the world's biggest asset managers for Gary Gensler and the rest of the approval committee to keep kicking the can down the road," referring to the regulator's chairman by name.

"I don’t expect to see a massive sell-the-news event as some have predicted. Rather than falling as low as $32,000, I think that bitcoin will take $50,000 by the end of January and we will see a record print of BTC this year," he said.

Firms such as on-chain data provider CryptoQuant say they expect bitcoin to drop to as low as $32,000 next month following the potential approval of a spot ETF – stating that traders' unrealized profits are currently lingering at a level that historically precedes a so-called correction, which for cryptocurrencies typically refers to a decline of 10% or more.