Nervous investors caused a drop in the value of various alternative cryptocurrencies this week, largely due to a concerning report from a crypto services company. This analysis suggested that the anticipated approval of the first exchange-traded funds (ETFs) for cryptocurrencies traded on the spot market might not happen.
As a result, the prices of numerous coins and tokens, regardless of their size and popularity, took a hit. Major altcoins like Polygon (MATIC), Uniswap (UNI), and Litecoin (LTC) were notably affected, experiencing declines of 14%, 18%, and 12%, respectively, over the week, according to data from S&P Global Market Intelligence.
The report from Matrixport had a significant impact on the crypto market. Released on Tuesday as part of their regular digest, it went against the norm and stirred concern within the crypto community.
In this particular report, Matrixport predicted that the U.S. Securities and Exchange Commission (SEC) would likely reject all the proposed spot Bitcoin (BTC) ETFs for various reasons, primarily citing SEC chief Gary Gensler’s reluctance to approve cryptocurrencies and related investments. The firm highlighted the need for stricter compliance in the industry and mentioned the lack of political incentive to legitimize Bitcoin as an alternative store of value.
While the report may have exaggerated its claims, it rightly highlighted how hopes for the approval of the first Bitcoin spot ETFs have been a driving force behind the broader crypto market’s growth. These ETFs would make it easier for investors to hold cryptocurrencies in a more accessible and secure way compared to the current complex and risky methods.
The potential rejection of crypto spot ETFs, which were expected to have a positive domino effect on the market, seems to have caused a setback. Bitcoin’s downturn on Tuesday had a cascading effect on many other altcoins, although some have since recovered partially but not to the levels seen at the beginning of the week. This evolving saga of crypto spot ETF approval or rejection is attracting considerable attention, and the market is closely monitoring its unfolding.
