Following Grayscale’s landmark court victory against the SEC over the regulator’s decision to reject the company’s spot Bitcoin ETF application, market analysts at Bloomberg have raised their probability for a spot Bitcoin exchange-traded fund (ETF) to be approved by the SEC before the end of the year.
Bloomberg Analysts Predict 95% Chance For The SEC To Apporve Spot Bitcoin ETFs In 2024
In an X (formerly Twitter) post on August 30, Bloomberg’s senior ETF analyst Eric Balchunas said that both he and James Seyffart – another ETF analyst at the network – believe that there is a 75% chance of spot Bitcoin ETFs launching this year.
Prior to the Grayscale ruling, the odds for approving the crypto exchange-traded products (ETPs) were at 65%, according to the analysts.
Blaunchas referred to a report by Bloomberg financial analyst Elliot Stein that said the “unanimity and decisiveness” of the court’s ruling was beyond expectations, leaving the SEC with “very little wiggle room”.
The market experts said the three-panel judge unanimously repudiated the SEC’s arguments in the case. With the SEC facing a deadline to approve other Bitcoin ETF applications, they believe the agency will struggle to justify further denials.
In a separate X Post, Seyffart added that spot Bitcoin ETF approvals will likely be a done deal by Q4 2024, with the odds of the instruments being approved skyrocketing to 95% by that time.
Court Decision Makes It “Untenable” For The SEC To Deny Remaining Applications
Balunchas noted that beyond the legal loss, the judges’ ruling was also a PR loss for the SEC since the news was covered heavily by the mainstream media, which according to the analyst matters because it sets the tone for the narrative and influences people’s response to the event.
The senior ETF expert believes the loss will make denying other spot Bitcoin ETF applications “politically untenable” to the securities watchdog.
On Tuesday, the DC Circuit Court of Appeals ruled against the SEC’s denial of Grayscale’s plans to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
The court vacated the decision after finding out the SEC was “arbitrary and capricious” in rejecting the exchange-traded products (ETPs) citing market manipulation and risk to investors while approving Bitcoin futures ETFs, a product that possessed the same risks yet is accepted as legitimate by the agency.
A written opinion from Judge Neomi Rao, who presided over the case, repudiated virtually every argument made by the SEC when comparing the Bitcoin spot and futures market.
Seven Spot Bitcoin ETF Applications Await Approval Deadline From The SEC
Seven Bitcoin spot ETF applications are due by the end of the week for a “first deadline” decision by the SEC. This includes applications by Bitwise on September 1, followed by BlackRock, Fidelity, VanEck, Invesco, and Wisdomtree on September 2, and Valkyrie on September 4.
Balchunas says he wouldn’t be surprised if the SEC delays the upcoming spot ETF applications given they are very close to the date of the Grayscale court outcome.
However, he said timelines won’t necessarily be a matter in this situation as it is more likely that the SEC will give in and approve the applications in one go.
Grayscale filed a lawsuit against the SEC in June of last year, arguing that the agency had been declining its application for years without providing a valid reason.
On Tuesday, the court asked the SEC to revisit and review the GBTC to Bitcoin spot ETF application. The ruling resulted in Bitcoin briefly hitting the $28,000 mark and global crypto markets surging.
At the time of writing, Bitcoin (BTC) is trading at $27,287 – dropping 0.3% in the last 24 hours.