In what could result in a game-changing legal victory against the U.S. Securities and Exchange Commission (SEC), Grayscale Investments has set the stage for a potential spot Bitcoin ETF in 2023. Bloomberg’s ETF analysts, James Seyffart and Eric Balchunas, have adjusted their predictions following this recent development. They now project a 75% probability of a spot Bitcoin ETF materialising within the current year, with odds surging to as high as 95% by the close of 2024.
This notable shift in sentiment stems from the decisiveness of the Grayscale case’s ruling, which surpassed expectations. In light of this turnout, Eric Balchunas stated, “James Seyffart and I are upping our odds to 75% of spot Bitcoin ETFs launching this year (95% by end of 2024). While we factored Grayscale’s win into our previous 65% odds, the unanimity and decisiveness of the ruling was beyond expectations and leaves the SEC with very little wiggle room.” Seyffart echoed this perspective, confirming that they believe it is almost certain that a spot Bitcoin ETF will be launched by the end of 2024.
Balchunas further emphasised, “We think the legal and PR loss will combine to make denial politically untenable.” This sentiment reflects the shifting dynamics surrounding the approval of a spot Bitcoin ETF.
Amid this optimism, there are looming deadlines for spot Bitcoin ETF applications from various financial heavyweights, including BlackRock, Bitwise, VanEck, WisdomTree, Invesco, Fidelity, and Valkyrie. These applications are scheduled for SEC review between September 1st – 4th. However, Seyffart and Balchunas anticipate potential delays given the recent Grayscale ruling. They suggest that the timelines may become less significant in the face of imminent approval.
Balchunas surmised, “We will not be surprised if the SEC delays given the ruling just happened. That said, I’m not sure timelines will matter as much in this situation. Probably more likely we wake up one day and hear SEC has given in, and a launch is imminent.” Seyffart added his perspective, noting, “We’re expecting delay orders this week on a bunch of the applications. We see approvals as highly unlikely so soon after the court decision.”
The pivotal turning point that has injected optimism into the prospect of a spot Bitcoin ETF was Grayscale’s legal triumph. Following the court’s decision in favour of Grayscale Investments, Bitcoin’s value surged by 5.4%, reaching $27,450, while the GBTC discount to net asset value narrowed from -25% to -17%.
Of significance, the court chastised the SEC for its inconsistent treatment of spot and futures-based Bitcoin ETFs. Grayscale’s proposed Bitcoin ETF closely resembles already approved Bitcoin futures ETFs in both underlying assets and surveillance sharing agreements. The court dubbed the agency’s denial of Grayscale’s proposal as “arbitrary and capricious.”
The SEC is currently within a 45-day timeframe during which it retains the option to formally request a rehearing. After this period, the court will proceed to release a definitive mandate with further directives. According to Nathan Geraci, President of The ETF Store, a pivotal crossroads has emerged for the SEC. The commission finds itself at a juncture where it must deliberate on several consequential choices regarding the GBTC. The alternatives encompass granting approval for GBTC’s transition into an ETF, refusing approval based on alternative grounds, or potentially mandating the closure of existing futures-oriented Bitcoin ETFs.
These ongoing advancements signify a watershed moment in the progression of the cryptocurrency domain. Notably, the prospect of a spot Bitcoin ETF materialising in the near future casts a significant shadow, with the potential to fundamentally reshape the trajectory of Bitcoin prices. These implications extend beyond mere valuations, encapsulating wider ramifications for the overall cryptocurrency market.
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