By Lyllah Ledesma

While markets appear to have fully embraced the idea that the U.S. Securities and Exchange Commission (SEC) will approve a spot bitcoin ETF (timing unclear), it's worth considering the chance of continued rejections and what that might mean for the price of the crypto.

It's no surprise that analysts believe there would be at least some negative short-term price impact on SEC rejections, but what to expect following the knee-jerk reaction?

“We could see a move downward and the target could be below $30,000,” said Laurent Kssis, a crypto trading adviser at CEC Capital.

Any decline, Kssis noted, would have to be balanced against other bullish catalysts, such as the approaching halving. “A cluster at $25,000 is highly unlikely unless the SEC is categorical, but I sense it will be a back-to-the-drawing-board situation and hope will still be in the back of everyone's mind.”

“If the ETF doesn't get approved, I anticipate it would be a significant letdown for the market," said Martin Leinweber, a product strategist at MarketVector Indexes. "The spot Bitcoin ETF is often viewed as a hallmark of institutional acceptance and integration into mainstream financial systems."

Leinweber added that a rejection might also trigger some legal turmoil for the SEC, which in June suffered a major court loss when it was ruled the agency was "arbitrary and capricious" in its rejection of Grayscale's attempt to convert its Bitcoin Trust (GBTC) into a spot ETF. The SEC in October notably failed to appeal the ruling, helping to lead to current expectations of coming approvals.

Leinweber notes that bitcoin, as a decentralized entity, certainly doesn't hinge its existence on an ETF, but “a rejection would undeniably cast a bearish shadow on bitcoin’s price in the short term.”

“I believe that the absence of an ETF would impose a substantial drag on the crypto market," he said. "It would necessitate a period of adjustment and realignment, as the market would need to decouple and forge a new narrative moving forward."

Other crypto assets such as ether (ETH) would likely not be immune to these repercussions, according to Leinweber, especially considering that the SEC would next shift its focus to the spot ether ETF applications.

Bullish action goes beyond ETF

“In the case that a spot ETF isn’t approved soon, we believe Bitcoin’s 2024 investment case remains very strong," said Hashdex’s CIO, Samir Kerbage. "More investors are beginning to appreciate the benefits of bitcoin as a store-of-value asset or type ofdigital gold.”

Kerbage also noted that the next Bitcoin halving is approaching and “if history once again rhymes, the price of BTC will react positively to this scheduled reduction in supply."