Grayscale’s victory in lawsuit is good for Bitcoin spot ETF
The lawsuit between the investment management company Grayscale and the U.S. Securities and Exchange Commission (SEC) finally came to an end the day before yesterday. The federal appeals court ordered the SEC to re-examine Grayscale’s conversion of its Bitcoin Trust Fund (GBTC) into Bitcoin spot. The application for ETFs has spurred a rebound in digital asset prices and cryptocurrencies.
While the ruling does not guarantee that Grayscale or any other company’s application will be approved, analysts generally view the decision as a landmark victory that will pave the way for the approval of future Bitcoin spot ETFs. Bloomberg ETF analyst Eric Balchunas posted on X (formerly Twitter) on August 30 that the federal appeals court’s consistent ruling increased the likelihood of a Bitcoin spot ETF being approved to 75% from the previous 65%.
NEW: @JSeyff & 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 prev 65% odds, the unanimity & decisiveness of ruling was beyond expectations and leaves SEC w "very little wiggle room" via @NYCStein pic.twitter.com/IyEGmWjuHa
— Eric Balchunas (@EricBalchunas) August 30, 2023
Bloomberg analysts James Seyffart and Elliot Stein also added in another report on August 30:
"The judges unanimously rejected the SEC's arguments, and the agency will have a difficult time providing a reasonable justification for denying approval when faced with a review deadline."
The sustainability of BTC’s rise
After the verdict came out, the overall cryptocurrency market saw a significant rebound, but after a few days of digestion, many coins seemed to have wiped out most of their gains. Clara Medalie, director of research at Kaiko, said in an interview with CoinDesk that while it is too early to judge the sustainability of Tuesday’s price increase, there are some small signs that we may see a slight reversal in the market.
Clara Medalie said it was worth noting that compared with other "mini bull markets" in the past, the trading volume accompanying the rise was relatively mild, rising only to a two-week high. Clara Medalie believes that trading volume represents market participants' participation in the market, so the lackluster volume data may indicate weakness behind this move.
However, the size of Bitcoin’s average buy order has jumped to its highest level since June, indicating that large investors are active in the market, which Clara Medalie believes is “good news” for the market.
Clara Medalie noted:
“A wave of ETF approvals would certainly be the bullish catalyst the cryptocurrency market needs right now. We are still in a tumultuous period for the industry, with quite a few bankruptcies and lawsuits ongoing.”
Meanwhile, market analyst Garreth Soloway predicted that if Bitcoin fails to decisively break through the $28,000 level before the mid-August sell-off, the price of Bitcoin is likely to fall further.
This article Analyst: After Grayscale wins the lawsuit, the probability of Bitcoin spot ETF being approved increases to 75%; is Bitcoin’s rising momentum sustainable? First appeared in Zombit.
