The United States Securities and Exchange Commission (SEC) appears to be laying the groundwork for Grayscale’s Bitcoin Trust (GBTC) to potentially become the inaugural contender to introduce a spot Bitcoin ETF in the United States, as they have chosen not to pursue an appeal following the court ruling.
The SEC’s decision regarding the court ruling is a pivotal moment in the cryptocurrency sphere, with investors and asset management firms eagerly anticipating the SEC’s next steps. The court ruling has raised questions about the SEC’s initial rejection.
In August 2023
The D.C. Circuit Court of Appeals scrutinized the SEC’s denial of Grayscale’s digital offerings, which included a request to transform GBTC into an ETF, deeming it “arbitrary and capricious.” The court underscored the importance of consistent transparency and honesty in federal agencies’ actions, asserting that if the SEC were to decline Grayscale’s ETF application once more, they would be obliged to furnish a comprehensive explanation for the rejection, as reported by Today News.
Following the SEC’s decision, the cryptocurrency market witnessed a notable impact as Bitcoin’s price surged by over one percent in just one hour. Specifically, Bitcoin’s price rose from $26,790 to $27,130 within the span of 30 minutes to one hour. This impressive price movement was accompanied by a close above its 200 EMA (Exponential Moving Average) and the breakout of an inverted head and shoulder pattern on an hourly time frame, both of which are regarded as strong bullish indicators.
It’s worth noting that the Grayscale Bitcoin Trust (GBTC), the world’s largest cryptocurrency fund, is currently trading at a discount of approximately 50%. Grayscale is eagerly awaiting the approval of a spot Bitcoin ETF in the hopes of eliminating this significant discount.
In spite of the favorable developments for Grayscale, an aura of uncertainty surrounds how the SEC will handle their ETF application. The SEC retains the authority to potentially reject it on other grounds, although Grayscale can challenge such rejections through legal avenues. This decision is not only critically important for Grayscale but also carries significant weight for other entities like BlackRock and Fidelity, eagerly awaiting SEC approval for their own Bitcoin spot ETFs.
The SEC’s verdict not only has profound implications for Grayscale but also for numerous other firms that have submitted applications for a spot Bitcoin ETF, including BlackRock, Fidelity, WisdomTree, Invesco, and others. As investors continue to await the SEC’s next major move, whether it involves approval or further delays, an overall positive sentiment is palpable in the market.
