By 10:19 ET (15:20 GMT), Bitcoin had gained 3.90% to $43,874.4.

The world’s most well-known cryptocurrency had dropped sharply on Wednesday, dragging its value down by as much as 7% from the year’s high of $45,922 reached on Jan. 2.

Analysts at AllianceBernstein (NYSE:AB) said the coin’s correction stemmed from a report from independent crypto trading firm Matrixport regarding the potential approval of a Bitcoin spot ETF by the U.S. Securities and Exchange Commission (SEC).

In a note, Matrixport Head of Research Markus Thielen argued that the ETF applications will likely be denied because they fall short of a “critical requirement.” Thielen added that SEC Chair Gary Gensler is “not embracing crypto in the U.S., and it might even be a very long shot to expect that he would vote to approve Bitcoin spot ETFs.”

According to Reuters, the SEC has a January 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares. The ruling could set the precedent for a host of current ETF applications from several other fund managers for a similar product, including one from the world’s largest asset manager, BlackRock (NYSE:BLK).

Goldman Sachs is also in talks to be an authorized participant for the potential spot Bitcoin ETF funds of both BlackRock and Grayscale, CoinDesk reported on Wednesday.

Speculation that the bids would get the green light from SEC partly fueled a more than 100% surge in Bitcoin in 2023. Proponents argue that the approval of a spot ETF will spur a deluge of capital inflows for Bitcoin, given that the product allows traders to invest in the token without directly holding cryptocurrency.

Analysts have cautioned that the approval may not trigger as large a bull run as expected, particularly in the wake of a string of recent scandals that have dented retail investors’ interest in the crypto industry. Meanwhile, elevated interest rates have also limited the amount of capital flowing into crypto.

The SEC has repeatedly rejected applications for a spot bitcoin ETF over the past two years, citing concerns that the token’s decentralized and volatile nature will prevent fund managers from protecting investors against market manipulation. Currently, all U.S.-traded bitcoin ETFs track the futures of the token, which are traded on the Chicago Mercantile Exchange.

“We continue to maintain that all price dips to the ETF are market opportunities to buy Bitcoin/Bitcoin miners, and the market will likely bounce materially off the actual approval event,” the AllianceBernstein analysts said.