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 (CRYPTO: MATIC), Uniswap (CRYPTO: UNI), and Litecoin (CRYPTO: LTC) — 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 (CRYPTO: BTC) 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.
Should you invest $1,000 in Polygon right now?
Before you buy stock in Polygon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Polygon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 18, 2023
Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin, Polygon, and Uniswap Protocol Token. The Motley Fool has a disclosure policy.
Why Altcoins Like Polygon and Uniswap Plummeted This Week was originally published by The Motley Fool
https://finance.yahoo.com/news/why-altcoins-polygon-uniswap-plummeted-234802193.html
