Amid a volatile market, Bitcoin’s price on Wednesday plunged more than 10 percent following a report by Matrixport that painted a grim forecast of rejection by the Securities and Exchange Commission (SEC) for the much-hyped Bitcoin ETF, sparking accusations of market manipulation against the firm.

As the crypto community braces for the SEC decision on the Bitcoin ETF, Matrixport analyst Markus Thielen sits at the center of a storm over his prediction, suggesting a regulatory rebuff that contradicts the bullish sentiment flooding social platforms. With billions in trade volumes hinging on the outcome, Thielen’s stance affected Bitcoin’s immediate pricing and has also opened a Pandora’s box of skepticism, pitting hopeful traders against wary regulators, and leaving the market on edge as the deadline approaches.

Bitcoin in front of a Bitcoin chart is displayed. A bearish report issued by Matrixport on Tuesday tanked the price of Bitcoin, leading some to speculate potential market manipulation.

Thielen, in a report issued Tuesday, anticipates a blanket rejection of all Bitcoin spot ETF proposals by the SEC by the January 10 deadline, hinged on a combination of political dynamics within the commission and ongoing compliance issues in the cryptocurrency industry. He points to the Democratic-leaning composition of the SEC’s commissioners and Chair Gary Gensler’s cautious stance on embracing crypto in the U.S. as major barriers to the approval of a Bitcoin spot ETF.

Matrixport’s report has significant implications for the cryptocurrency market. If the SEC were to reject the proposals, Thielen foresees a dramatic unwinding of billions of dollars in perpetual long Bitcoin futures—a cascade that could potentially lead to a 20 percent drop in Bitcoin’s price, plunging it back into the $36,000 to $38,000 range (Bitcoin is trading around $42,700 at the time of writing).

That report sparked a firestorm within the crypto community, leading to accusations of market manipulation against Thielen, with many questioning the timing of the report’s release and its potential influence on Bitcoin’s market price.

“How short were you when writing this? Just for [transparency’s] sake!” Farokh Sarmad, founder of Web3 media company and decentralized media platform Rug Radio, said to Thielen on X, formerly Twitter, accusing the author of the report of having a vested interest in a Bitcoin price drop.

Other users responded, saying things like, “this looks a little like market manipulation,” and “no journalistic integrity, as no sources are even mentioned.”

Cryptocurrency market participants denounced Thielen’s report because his bearish outlook is in contrast to the bullish predictions that have been driving up Bitcoin’s price over recent months. Since the start of last year, Bitcoin has risen more than 150 percent, bolstered by the widespread anticipation of an SEC approval for the Bitcoin ETF.

The potential SEC rejection as foreseen by Thielen, though it aligns with Gensler’s cautious approach to cryptocurrency, clashes with the expectations of many investors who view the approval of a Bitcoin spot ETF as a milestone for mainstream cryptocurrency adoption.

A denial by the SEC could reinforce the perception of an unbridgeable gap between traditional financial regulations and the evolving world of cryptocurrencies. This, in turn, could lead to further volatility and uncertainty in the crypto markets, affecting investor confidence and possibly slowing the integration of cryptocurrencies into conventional financial systems.

Despite the bleak short-term outlook, Thielen’s perspective for the year remains somewhat bullish. Drawing on historical trends related to U.S. election years and Bitcoin mining cycles, he believes Bitcoin’s value will rise above its early 2024 levels by the end of the year.

While Bitcoin prices have recovered slightly from the 10 percent loss seen Wednesday, the immediate future of Bitcoin and the broader cryptocurrency market remains mired in uncertainty, especially with the looming SEC decision.

Contrary to Thielen’s view, a distinct segment of the market, represented by traders on the decentralized prediction platform Polymarket, holds a more optimistic outlook. Those traders are betting heavily on the approval of Bitcoin ETFs in the U.S., with a greater number believing that one or more ETFs will go live within the next two weeks.

Shares favoring the approval (‘Yes’ side) of a Bitcoin ETF by January 15 are trading at 82 cents, suggesting an 82 percent probability of the event occurring by then. To date, traders have committed $903,188 to the ETF-dedicated prediction contract on Polymarket, pointing to a broad belief that the ETF will be approved.