Bitcoin rises on ETF hopes
Bitcoin climbed 3% this week after a US appeals court ruled in favour of Grayscale in its ongoing battle against the Securities and Exchange Commission (SEC).
The world's largest digital asset by market capitalisation (BTC-USD) has risen 3.1% in the past seven days and is currently changing hands for $27,256 (£21,495), according to CoinGecko.
A court ruling on Tuesday, which ordered the SEC to review its rejection of Grayscale's spot bitcoin ETF application, has prompted Bloomberg analysts to increase their odds of an ETF being approved.
A spot bitcoin ETF is an exchange-traded fund that directly invests in actual bitcoin, as opposed to bitcoin futures or other financial derivatives.
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Bloomberg analysts James Seyffart and Eric Balchunas are growing more hopeful about the chances of an approval from the US regulator. They predict a 75% chance this year and a 95% chance by 2024.
Balchunas said Seyffart and himself have raised their odds to 75% from an earlier 65%. In a Wednesday X.com post, Balchunas said, "the unanimity and decisiveness of the ruling was beyond expectations and leaves SEC with very little wiggle room."
In a separate note, Balchunas and Seyffart emphasised, “The judges unanimously repudiated the SEC’s arguments, and the agency will struggle to justify further denials as it faces deadlines.”
Balchunas noted that, given the recent setback for the SEC, and its impact on public relations, denying a Bitcoin ETF application would now be politically difficult. He said, “We think the legal and PR loss will combine to make a denial politically untenable.”
A three-judge panel of the District of Columbia Court of Appeals in Washington on Tuesday ruled the SEC was wrong to reject Grayscale's proposed bitcoin ETF without explaining its reasoning.
"The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products,” the court's ruling stated. “We therefore grant Grayscale’s petition and vacate the order.”
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However, Tuesday's ruling does not necessarily clear the way for the first spot bitcoin ETF in the US.
The SEC has the option to appeal the three-judge panel's ruling. The commission has 45 days to request an en banc hearing in which all 17 judges of the US Court of Appeals for the DC circuit would review Tuesday's decision.
A spot bitcoin ETF would give institutional investors exposure to the world's largest cryptocurrency by market capitalisation without the risk associated with having personal custody of the digital asset. The SEC has denied all spot bitcoin ETF applications to date, saying each filing does not show how investors can be protected from market manipulation.
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