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Bloomberg Analysts Raises Approval Chances Of Spot Bitcoin ETF To 75%

Bloomberg senior analysts Eric Balchunas and James Seyffart have raised their approval odds of the first Bitcoin spot exchange-traded fund (ETF) in the United States (US) to 75%. 

This development comes after the US District of Columbia Circuit ruled against the US Securities and Exchange Commission (SEC), stamping out the regulator’s denial of Grayscale’s conversion of its Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF.

Court “Unanimity And Decisiveness” Unexpected, SEC Now In Tight Spot, Analysts Say

According to his X post on August 30, Eric Balchunas explains that the new stance from him and his colleague was based on certain developments in Grayscale’s case against the SEC.

Related Reading: US Bitcoin ETF Approval Could See North America’s ETF Volume Rise To 99.5%

Although the Bloomberg analyst stated that a Gracyscale victory had been factored into their last 65% approval odds of a Bitcoin spot ETF, the court’s “unanimity and decisiveness” in ruling against the SEC was quite unanticipated.

Furthermore, Balchunas explains that the SEC now faces a PR loss as Grayscale’s victory received media coverage from top media firms across the country. Combining this situation with the recent court defeat, the commission’s denial of the Bitcoin spot ETF will be “politically untenable.”

In their official report, both Balchunas and Seyffart also highlighted that the SEC’s dilemma worsens as it faces its first deadlines on seven Bitcoin spot ETF applications between September 1 and September 4. 

However, following the recent court ruling, the Bloomberg analysts believe the securities regulator will likely give a delayed order. 

Bitcoin

Finally, if the SEC is somehow able to deny all applications, the analysts state the financial agency will struggle to reject Hashdex’s unique proposal.

On August 25, the Brazillian asset manager filed to introduce a mixture of Bitcoin spot and futures ETF, secured by the Exchange for Physical (EFP) transactions, instead of a surveillance-sharing arrangement (SSA) with a crypto exchange. 

Based on all the factors listed above, Balchunas and Seyffart rate the approval chances of a Bitcoin spot ETF in 2023 at 75%, with the potential of these odds rising to 95% at the end of 2024. 

Bitcoin Poised For Massive Gains If Spot ETF Gains Approval

Following the influx of Bitcoin spot ETF applications in June, there has been much optimism about the potential effects these trading products could have on the premier cryptocurrency. 

A Bitcoin spot ETF tracks the price of BTC, granting investors indirect exposure to the asset without the risks of direct investment in the cryptocurrency itself. According to hedge fund expert Tom Lee, a spot ETF will likely create a high demand-to-supply ratio of the largest crypto asset, pushing its prices of BTC as high as $185,000.

Related Reading: Ethereum ETF Race Gets Hotter As SEC Receives 11 Filings In One Week

The market leader rose by over 7% following Grayscale’s court victory to trade at $27,974.42, according to data from Coingecko. However, BTC soon experienced a price correction, finding support around the $27,000 price zone.

At the time of writing, Bitcoin is trading at 27,229.89 with a 0.9% loss in the last day.

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BREAKING: Grayscale Triumph: SEC Crushed, GBTC Rockets Towards ETF, Bitcoin Targets $28,000

In a significant turn of events for Bitcoin (BTC) and the overall market, cryptocurrency asset manager Grayscale has emerged victorious in its legal battle against the U.S. Securities and Exchange Commission (SEC). 

The U.S. District of Columbia Court of Appeals has ruled in favor of Grayscale, overturning the SEC’s lawsuit and potentially bringing the company one step closer to achieving Bitcoin Spot exchange-traded fund (ETF) status. 

Bitcoin Surges As Grayscale’s Legal Victory Boosts Market Sentiment

The recent ruling by the U.S. District of Columbia Court of Appeals has dealt a significant blow to the SEC’s efforts to impede Grayscale’s progress in establishing a Bitcoin spot ETF. 

While this decision does not automatically convert Grayscale’s flagship product, the Grayscale Bitcoin Trust (GBTC), into a Spot ETF, it undoubtedly marks a crucial milestone toward achieving that goal.

James Seyffart, Bloomberg’s renowned ETF expert, emphasizes that this legal triumph for Grayscale brings the company closer to attaining ETF status for Bitcoin. The court’s decision to vacate the SEC’s denial of GBTC’s conversion into an ETF opens doors for further discussions and advancements in the cryptocurrency market.

Bitcoin

As a result, Bitcoin has experienced a notable surge of over 4%, currently trading at $27,300, slightly above its 200-day Moving Average (MA). Initially, there were concerns that the MA could hinder Bitcoin’s recovery from recent setbacks. 

However, in light of the recent developments regarding Grayscale’s legal victory, BTC effortlessly surpassed the $27,000 mark and briefly reached $27,500.

To sustain its recovery, Bitcoin must maintain the $27,000 level and avoid falling below the moving average once again. Establishing the MA as a new support level would safeguard against short-term price declines. 

Furthermore, it would position the cryptocurrency favorably for another attempt to overcome the resistance at $28,000, should it fail to breach this barrier in its initial efforts.

This triumph for Grayscale against the U.S. regulatory bodies represents a significant victory for the entire cryptocurrency market, which has been grappling with an ongoing crackdown by regulatory authorities. 

The outcome of this legal battle sets a positive precedent that could reignite confidence in the market and reverse the recent trend of liquidity outflows.

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Crypto Analyst Points To Bitcoin Price History Repeating Itself – Are The Signs Bullish?

The general crypto market has recorded a slight decline in the last week, with the market leader Bitcoin losing 0.78% of its value over the last seven days.  

This price loss amplifies BTC’s negative monthly performance, pushing its total loss in the last 30 days to around 5.38%, according to data from CoinMarketCap.

At the time of writing, the premier cryptocurrency is trading at around $29,022, with its daily trading volume valued at $10.746 billion, having gone down 12.54%. 

However, amidst Bitcoin’s current downtrend, it appears the token’s larger performance could be indicating a bullish market in the coming months.

Bitcoin Could Be Repeating Historic Bullish Price Cycle – What Does This Mean? 

On Aug. 4, crypto analyst Ali Martinez on social media platform X posted that Bitcoin is likely repeating a popular bullish cycle of its price history.  

According to Ali, the token current’s price trajectory since attaining its all-time high in November 2021 is identical to its price movement between 2013 and 2017 based on data from Glassnode.

 bitcoin

If this analysis proves correct, with Bitcoin mirroring its 2013-2017 price cycle, it means Bitcoin is expected to show little price movement in August 2023 and September 2023, perhaps recording some slight gains along the way. 

However, Glassnode data shows BTC could experience a price upswing in October 2023, maintaining a bullish momentum all through this month. Thereafter, the token is expected to undergo a major re-correction finding support in the first week of November 2023. 

Based on the reference price cycle, Bitcoin could then experience a significant price drop in the last month of 2023 but close the year in a strong consolidation zone.

Beyond 2023, the BTC market could also be set for huge profits in 2024 and 2025 if Bitcoin is indeed repeating the 2013-2017 price cycle during which the market leader famously gained by over 1600%.

However, all investors are reminded that predictions are not guaranteed and should not be considered as investment advice. 

Rising Optimism In The BTC Market

In other news, it appears there is a rising positive sentiment around Bitcoin, with a significant increase in its accumulation by key holders. According to a report by on-chain analytics firm Santiment, BTC whales and sharks are currently swapping their BUSD and DAI for more BTC. 

Santiment noted the situation was quite the opposite back in July, with the BTC heavyweights shedding some of their holdings. However, the analytics firm reports that if the current trend is maintained, we could see BTC trade above $30,000 again. 

Related Reading: Bitcoin NVT Shows Bearish Crossover, Price Drop Incoming?

In the last few weeks, Bitcoin has remained among the headlines, with much discussion on the ongoing Bitcoin ETF race in the US.  On Aug. 2, Bloomberg ETF analysts James Seyffart and Eric Balchunas rated the approval chances of the first spot Bitcoin ETF at 65%. This is an impressive upgrade from 50% some weeks ago and 1% a couple months ago. 

BitcoinBTC trading at $28,979 on the weekly chart | Source: BTCUSD chart on Tradingview.com

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BlackRock CEO’s Turnabout on Bitcoin Elicits Cheers, Skepticism of Crypto Cred

BlackRock CEO Larry Fink’s change of heart on bitcoin could make it easier for fellow Wall Street executives to embrace cryptocurrencies, but experts warn that his favored financial instrument – the exchange-traded fund, or ETF – is an investment vehicle that’s categorically different from the core idea behind digital assets, and could push the industry in the wrong direction.

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SEC Still Against Spot-based Bitcoin ETFs. Is There A Light At The End Of The Tunnel?

With the approvals of futures bitcoin ETFs, firms have taken it one step further and have applied with the Securities and Exchanges Commission (SEC) for spot-based bitcoin ETFs. However, unlike their futures and short counterparts, the spot ETFs have not found favor in the eyes of the regulatory watchdog. And as more spot-based bitcoin ETF applications are declined by the SEC, questions have arisen about whether the market will see one anytime soon.

Grayscale And Bitwise Applications Rejected

Over the last month, anticipation had built up regarding spot-based Bitcoin ETF filings by both Grayscale and Bitwise. Grayscale had filed its application last year, with the SEC postponing its decision multiple times, but the firm had remained steadfast in its resolve to try to get approval for a spot bitcoin ETF. The final decision had come last week and it was indeed negative as experts had forecasted.

Grayscale had received a rejection on its application but it was not the only one. Bitwise had also made a filing for a spot BTC ETF and the SEC had also put a stamp of rejection on it too. The latter had filed to convert its popular Grayscale Bitcoin Trust (GBTC) to a spot-based ETF. The fund which has $12.35 billion is the largest bitcoin trust and is looking to move to the next level.

Related Reading | Mounting Support For Bitcoin At $19,000 As Market Ushers In A New Week

At the rejection, Grayscale had swiftly filed a lawsuit against the SEC alleging that the regulatory body has no reason to actually deny its application. Michael Sonnenshein, CEO of Grayscale, lamented the fact that the SEC had green-lighted four futures bitcoin ETFs in less than one year but had refused to approve any spot-based BTC ETF, accusing them of “acting arbitrary and capricious.” 

Grayscale discount grows | Source: Arcane Research

However, the SEC has said that the rejection was due to fears about market manipulations in the bitcoin spot markets, the role that the stablecoin Tether will play in this, and the overall lack of regulated exchanges and surveillance in the bitcoin market.

Bitwise on the other hand has not made any move following the rejection and seems to be taking this one on the chin.

Is A Spot-Based Bitcoin ETF Coming?

With the rejection, the reality of a spot-based bitcoin ETF coming to the market has been pushed back once more. Given the time frame that it took for the SEC to make a decision on these ETFs, it is expected that filing and getting a decision on another spot-based ETF could take almost two years or about 18 months. This means that it is unlikely that the market will see a spot-based BTC ETF this year contrary to what was forecasted by market analysts in 2021.

BTC holding shakily above $20,000 | Source: BTCUSD on TradingView.com

Nevertheless, Grayscale has not backed down on its mission to turn the GBTC into a spot-based ETF. The lawsuit is still in its early stages but the CEO has expressed hope that they would receive a decision in the next year.

Related Reading | Institutional Investors Remain Bearish As Short Bitcoin Sees Record Inflows

Grayscale’s GBTC still continues to trade at a heavy discount and the firm’s annual management fee is firmly at 2%. This means that if its filing to convert to a spot-based ETF is not approved in the next two decades and fails to remain close-ended, it would be unable to justify the discount at which it is currently trading. However, with the firm’s drive to gain approval from the SEC, it is not a stretch to think that it would get it in the next 20 years.

Featured image from Coincu News, charts from Arcane Research and TradingView.com

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