“Friday’s looming presence in the Bitcoin-ETF approval race has the cryptocurrency community on the edge of their seats, as the outcome could potentially redefine the future of digital investments.”
The quest for a Bitcoin exchange-traded fund (ETF) has taken an interesting turn, as a DC court is set to issue a mandate that could make effective an August opinion in favor of Grayscale Investments LLC. Grayscale had sued the US Securities and Exchange Commission (SEC) in an attempt to convert its Bitcoin trust (GBTC) into an ETF. The SEC recently opted against appealing the previous ruling, which it had lost. This court mandate is seen as the next step in the process.
The progress on the Grayscale conversion-front could bring further clarity to the ETF-approval process, which has remained opaque to industry watchers. Many were unsure about how the SEC would handle the asset-manager’s proceedings, as well as the numerous other outstanding applications. However, there is optimism surrounding the approval of a Bitcoin ETF this year, with crypto investor Michael Novogratz stating his expectation of SEC approval.
Grayscale’s court win was seen as monumental within the digital-assets community, as it sparked excitement that a Bitcoin ETF could finally be available in the US after a decade-long battle. The SEC has been hesitant in the past to approve such a product, but there are now several companies, including BlackRock Inc. and Invesco, trying to launch their own Bitcoin ETFs.
Bloomberg Intelligence suggests that the most likely scenario is that Grayscale’s application will be approved alongside those of other issuers like BlackRock. This theory is supported by ARK Investment Management’s Cathie Wood, who believes the SEC could green-light multiple applications at once.
The excitement around Grayscale’s conversion process has helped its Bitcoin trust rally, with GBTC currently trading about 14% below the value of its underlying holdings. This is the narrowest discount seen since 2021, compared to a discount of around 50% earlier this year. The shares of the trust have more than doubled in value this year.
However, there are still uncertainties within the overall process. Cryptocurrency prices were whipsawed earlier this week after a false report claimed that the SEC had approved a spot-Bitcoin ETF. The market quickly reversed gains following the debunking of the headline. This incident highlighted the excitement around a potential Bitcoin ETF but also revealed how the entire market can be influenced by unverified information.
Bitcoin is currently trading at around $28,200, less than half of its record high of almost $69,000 reached in late 2021. With the court mandate approaching, all eyes are on the potential approval of a Bitcoin ETF and the implications it could have on the cryptocurrency market.