Bloomberg analysts Eric Balchunas and James Seyffart claimed the chances of the United States Securities and Exchange Commission (SEC) approving a Bitcoin (BTC) spot exchange-traded fund (ETF) this year, have shot up nearly 75%, following the recent Grayscale victory against the American regulator.
On August 30, Balchunas took to social media platform X, asserting that he and Seyffart are now more optimistic about their prediction of spot Bitcoin ETFs gaining approval this year. Interestingly, the analysts suggested a 75% chance of approval this year and a 95% chance by the end of 2024. Balchunas wrote,
“James Seyffart & I are upping our odds to 75% of spot bitcoin ETFs launching this yr (95% by end of ’24). While we factored Grayscale win into our previous 65% odds, the unanimity & decisiveness of ruling was beyond expectations and left SEC with very little wiggle room.”
Beyond the legal loss, there is also the PR loss (which matters bc it sets narratives, changes minds). And this got covered far and wide in mainstream media incl NYT, WSJ, CNN, AP, ABC & on and on. We think the legal and PR loss will combine to make denial politically untenable. pic.twitter.com/Uarh5CszXC
— Eric Balchunas (@EricBalchunas) August 30, 2023
Experts Weigh in on Chances of BTC ETF Approval
The wave of optimism comes hot on the heels of the recent court ruling that sided with Grayscale Investments in a decade-long effort to launch an exchange-traded fund that tracks Bitcoin (BTC).
On August 29, a Federal court ruled that the SEC was wrong to reject Grayscale’s proposal to convert the Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF without explaining its reasoning.
In a series of X posts, Balchunas highlighted that the recent court ruling, which exceeded their expectations, has boosted their forecast by 10% from the previous 65% they had pegged the chances of a spot Bitcoin ETF approval.
Based on recent events and new information @ericbalchunas and I are officially increasing our spot #Bitcoin ETF approval odds to 65%. That's from 50% a couple weeks ago and 1% a few months ago. pic.twitter.com/VBLG8EYfoP
— James Seyffart (@JSeyff) August 2, 2023
Furthermore, the analyst highlighted the image crisis the loss had generated for the SEC, explaining,
“Beyond the legal loss, there is also the PR loss (which matters bc it sets narratives, and changes minds). This got covered far and wide in mainstream media including NYT, WSJ, CNN, AP, ABC & on and on. We think the legal and PR loss will combine to make denial politically untenable.”
The Bloomberg experts also believe that the SEC could further delay applications before it could approve the ETFs, especially since the Grayscale ruling just took place. As per Seyffart, even if the financial regulator denies all applications, Hashdex’s application for spot Bitcoin exposure in decentralized finance (DeFi) might be more difficult to reject due to its unique and novel approach.
Even if SEC wants to deny all of these applications. We think they would have a very hard time finding a way to deny @hashdex's unique and novel approach for spot Bitcoin exposure in $DEFI. Worries about spot manipulation & settlement should be assuaged. Increasing '24 odds pic.twitter.com/b1HHbbHeEq
— James Seyffart (@JSeyff) August 30, 2023
Speculation Rises Within the Crypto Community
Speculations around the potential Bitcoin ETF approval seem to have hit a fever pitch in the crypto community. On August 30, Bloomberg litigation analyst Elliot Stein warned the SEC can continue to harass Grayscale, prolonging the approval process. Instead, the regulator could approve other ETF applications. Stein wrote,
“James Seyffart and I were talking yesterday about how if the SEC wants to be vindictive, they could approve the other applications, and drag out the process with Grayscale.”
@JSeyff and I were talking yday about how if the @SECGov really wants to be vindictive, they could approve the other applications, and drag out the process with @Grayscale.
— Elliott Z. Stein (@NYCStein) August 30, 2023
Not only the crypto community, but many legal experts are also rooting for a potential Bitcoin ETF approval in the coming months. Recently, pro-Bitcoin lawyer Joe Carlasare shared his expert insights on the matter, projecting the likelihood of approval to be in the range of 30% to 40%.
Earlier this year, brokerage firm Bernstein released a report, indicating a “relatively high” probability of approval for a Bitcoin spot ETF. According to the report, the SEC could approve the product based on its prior approval of futures-based Bitcoin ETFs and leverage-based futures ETFs.
Several firms have been applying for spot bitcoin ETFs for more than two years, but so far, the SEC has denied more than 30 proposals since 2021. But investor sentiment was buoyed in June when BlackRock, the world’s largest asset manager with over $9 trillion in assets under management, put in an application.
Bitcoin ETF Approval to Drive BTC Prices Through the Roof
Bitcoin ETFs have sprung up around the world and have been approved outside the US, including Europe, Canada, and Brazil. However, to date, the US SEC has rejected every application for a spot Bitcoin ETF. The approval of a spot bitcoin ETF in the United States would be a significant milestone.
For financial advisors in particular, a spot ETF would allow them to offer their clients Bitcoin (BTC) exposure in a familiar and trusted vehicle that is liquid and accessible. Additionally, others showed confidence that BTC prices will explode if the SEC ends up approving a spot Bitcoin ETF in the near future.
In a recent CNBC interview, Tom Lee, Fundstrat Global Advisors’ managing partner and head of research said a spot ETF will mop up all daily supply of the largest digital asset, creating an “imbalance” that will inevitably drive prices higher. Based on this, demand will significantly outstrip supply, driving prices to $185,000 or higher.
“If the Bitcoin ETF gets approved price could reach $185,000” – Tom Leepic.twitter.com/kwlyJlwebK
— Altcoin Daily (@AltcoinDailyio) August 30, 2023
Amidst the legal frenzy, It seems the final decision on the Bitcoin ETF case’s outcome could either offer vindication for the SEC’s posture or pave the way for other companies to offer spot Bitcoin ETFs if the judges rule for Grayscale Investments.
