- By the end of 2023, there is a 75% chance that the US crypto market will have a spot in Bitcoin ETF, says Bloomberg analysts.
- The increased probability is fueled by the court’s decision in favor of Grayscale concerning the SEC’s denial of their application.
- SEC extends the deadline for declaring a decision concerning spot Bitcoin ETF applications by 45 days to mid-October.
The likelihood of having a spot Bitcoin exchange-traded fund (ETF) in the US by the end of the year has increased, according to Bloomberg Intelligence analysts, due to the recent court ruling made in favor of Grayscale Investments in a lawsuit against the Securities and Exchanges Commission (SEC).
According to a post by Bloomberg senior ETF analyst Eric Balchunas on X (Twitter) on August 30, the possibilities of the approval of a spot Bitcoin ETF have increased from 65% to 75% as a result of the unanimous and decisive ruling that the United States Court of Appeals Circuit made in the recent case.
“The judges unanimously repudiated the SEC’s arguments, and the agency will struggle to justify further denials as it faces deadlines,” Bloomberg analysts James Seyffart and Elliot Stein added in a separate Aug. 30 note.
Seyffart added that spot Bitcoin ETF approvals will probably be a “done deal” by Q4 2024, estimating that the approval probability will have increased to 95% by then.
The crucial court victory for Grayscale over the SEC on Tuesday, in which the federal appeals court deemed the SEC’s justifications for opposing the digital asset firm’s application “unlawful,” has played a significant role in the shift in public opinion.
The court criticized the SEC’s inconsistent treatment of spot Bitcoin ETFs and comparable futures-based funds, given that Grayscale’s proposed Bitcoin ETF was very similar to already approved Bitcoin futures ETFs in both the underlying assets and surveillance sharing agreements.
According to the court, the regulator’s denial of Grayscale’s proposal was “arbitrary and capricious.” Following the court’s ruling, the price of Bitcoin increased by 6% to reach over $27,000.
SEC Faces Pressure to Approve Applications
Aside from losing legally in court, Balchunas stated that the SEC had also suffered a public relations loss due to the massive media coverage the case and ruling attracted from media houses such as the Wall Street Journal, CNN, and the New York Times. As a result, Balchunas believes that a denial of the current spot Bitcoin ETF applications by the SEC will be “politically untenable.”
Interestingly, after the recent wave of applications for a spot Bitcoin ETF, the deadline for a decision from the SEC on six of the applications is this weekend. Notably, the deadlines are not final and the SEC is at liberty to extend and take more time to review the filings.
However, given the case’s ruling and the current pressure to make a decision in favor of the applications, Balchunas and Seyffart said that they are expecting “delay orders” to extend the deadlines as they believe approval is “highly unlikely so soon after the court decision.”
True to their expectation, the SEC filed delay orders on August 31, starting with Wisdom Tree Fund’s spot Bitcoin ETF application. The Commission extended the deadline by 45 days moving the new deadline to mid-October.
Delay orders for the other applications made by Blackrock, Bitwise, VanEck, Invesco, Fidelity, and Valkyrie were also issued making October 16 and 17 the new date for the decision.