U.S. Federal Court Orders SEC to Reconsider Rejection of Grayscale’s Bitcoin ETF Application

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U.S. Federal Court Orders SEC to Reconsider Rejection of Grayscale’s Bitcoin ETF Application

A U.S. federal court has ordered the Securities and Exchange Commission (SEC) to vacate its rejection of Grayscale Investments’ application to convert its Bitcoin Trust product into an exchange-traded fund (ETF). This ruling is seen as a significant step towards the approval of spot bitcoin U.S. exchange-traded funds.

The SEC has previously approved several bitcoin futures ETFs but denied Grayscale’s application to convert its Bitcoin Trust to an ETF. The reason behind the denial was the belief that bitcoin spot markets lacked sufficient surveillance to prevent fraud and manipulation. However, the recent court ruling may change the trajectory of bitcoin ETF approvals.

Ruling Does Not Guarantee Approval, but Increases Possibility

Although the court ruling does not mandate the SEC to approve Grayscale’s application, it strongly suggests that the odds of a bitcoin spot ETF being approved in the future are high. Analysts at QCP Capital state that while the order requires the SEC to review the application again, the commission could still find another rationale for rejecting it.

The push for spot bitcoin ETFs has gained momentum, with several asset managers like BlackRock, Fidelity, WisdomTree, VanEck, Invesco, ARK Invest, and 21 Shares filing or re-filing their applications in June. These applicants will be eagerly awaiting the SEC’s decisions, which have been delayed until October.

The Future of Bitcoin ETFs

The recent court ruling has brought new hope for the approval of bitcoin ETFs. If the SEC reviews and ultimately approves Grayscale’s application, it could set a precedent for other companies seeking to convert their bitcoin products into ETFs.

Where is bitcoin heading to?

Bitcoin’s price has been volatile in recent days, with a brief rally above $28,000 followed by a drop back to around $26,000. Analysts at QCP believe that the recent court ruling regarding Grayscale presents an opportunity to fade the short-term price pump and expect bitcoin to trade sideways in the fourth quarter. They also note that optimism surrounding bitcoin ETFs may fade and that the lack of innovation in the crypto space compared to other tech sectors could weigh on its performance.

However, there is optimism for bitcoin in the first quarter of 2024. Analysts anticipate the approval of bitcoin ETFs in March 2024, which could lead to a rally. Additionally, the upcoming bitcoin halving event in April or May next year, which has historically boosted the cryptocurrency’s price, could further contribute to a positive market outlook.

Bobby Zagotta’s perspective

Bobby Zagotta, the CEO of Bitstamp USA, shares the optimistic outlook for bitcoin in the start of the new year. He believes that investors can expect more regulatory clarity and increased participation in the digital asset space in 2024. These factors could lay the groundwork for a potential bitcoin rally.

Crypto in a snap

According to CoinDesk data, bitcoin gained 2.4% in the past seven days and was trading at approximately $26,113 on Thursday. Ether, another prominent cryptocurrency, experienced a 1.5% advance during the same period, reaching around $1,652.

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