- Bloomberg analysts have increased the likelihood of a Bitcoin ETF receiving approval by the end of 2023 to 75%, following Grayscale’s recent court victory against the SEC.
- Within the next five days, the SEC will hit the “first deadline” for decisions on seven pending Bitcoin ETF applications from major firms like BlackRock, VanEck, and Fidelity.
Bitcoin ETF’s Favorable Tides: Grayscale’s Courtroom Feat Shifts the Odds
The landscape for Bitcoin Exchange-Traded Funds (ETFs) has experienced a tectonic shift following a landmark legal decision involving Grayscale and the U.S. Securities and Exchange Commission (SEC). Bloomberg’s senior ETF analyst Eric Balchunas and his colleague James Seyffart have revised their forecast, stating there is now a 75% chance that a spot Bitcoin ETF will get the nod from the SEC by the close of 2023.
Bloomberg: 75% chance of 2023 #Bitcoin ETF, 95% by 2024. Grayscale's influence leaves little SEC leeway for the #BTC ETF approval. Details: https://t.co/3PAK8vNVeV https://t.co/QO5jabj83z pic.twitter.com/MaT20ENHXP
— Collin Brown (@CollinBrownBTC) August 31, 2023
Unpacking Grayscale’s Ripple Effect
In a groundbreaking case, the United States Court of Appeals Circuit unanimously invalidated the SEC’s reasons for obstructing Grayscale’s efforts to convert its Bitcoin Trust into a spot ETF. The court’s decisive ruling stated that the SEC’s actions were “arbitrary and capricious,” effectively cornering the regulatory body into a difficult position for further ETF denials. This unanimity has accelerated the projected chances of approval from a previous 65% to the current 75%. Seyffart has gone so far as to predict a 95% chance of approval by Q4 of 2024, essentially considering it a “done deal.”
In the arcane regulatory landscape of cryptocurrency, the court’s decision offers a substantive precedent. Balchunas has opined that any further denial from the SEC in the wake of this loss would be “politically untenable,” amplifying the pressure on the agency as they approach imminent deadlines.
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The next critical juncture for the SEC lies just around the corner. Seven major Bitcoin spot ETF applications from firms like Bitwise, BlackRock, VanEck, Fidelity, Invesco, Wisdomtree, and Valkyrie are on the cusp of their “first deadline” decisions by the SEC. Although Balchunas speculates that these applications could face delays, the momentum of Grayscale’s victory could herald a surprise wave of approvals.
The Clock is Ticking: Upcoming SEC Deadlines
The SEC operates under a standard review period of 240 days for ETF proposals, with specific decision deadlines usually occurring at 45-, 60-, and 90-day intervals within that timeframe. With the clock ticking, Balchunas and Seyffart anticipate “delay orders” as the regulatory body recalibrates its strategy post-Grayscale. However, the overwhelming sentiment among industry experts is leaning towards a favorable turn of events for Bitcoin ETF approvals, especially given the court’s unequivocal stance.
The court’s ruling has not only altered the statistical probability but has also sparked a strategic conundrum for the SEC. The regulatory body now faces a dilemma: it can either maintain its obstinate stance at the risk of appearing arbitrary, or pivot in the direction that recent legal precedent and market sentiment clearly suggest.
Thus, while the timeline for the ETF approvals may still be uncertain, the scales are tipping increasingly in favor of a regulatory thumbs-up, ushering in a new era for Bitcoin and its entry into mainstream financial markets.
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