Spot Bitcoin ETF Likelihood Increases

By ulriklykke | Bitcoin Global Macro | 30 Aug 2023

The probability of a U.S.-based Bitcoin spot ETF increased yesterday as Grayscale Investment Trust won its case against the SEC.

The question remains whether the backwind is enough for us to expect an American Bitcoin ETF anytime soon.

The Macro Picture - Bad News is Good News

Earlier in the week, the US stock market edged higher after the data displayed a decline in monthly job openings.

The market is clearly anticipating that a weakened job market will be enough of a signal to stop the Fed in its rate hike crusade.

In other words, the bad news is good news, and markets are reacting positively to the fact that the labor markets are weakening.

Right now, predictions from the CME Group’s FedWatch tool indicate an 87% chance of no rate hike.

Grayscale Triumphs: A New Dawn for Bitcoin Spot ETFs

This week, Grayscale won its case against the SEC's decision from June 2022 to reject the company's Spot Bitcoin ETF application, sparking a rally that saw Bitcoin rise by over 5% in a single day.

According to the court ruling given yesterday, the SEC "failed to adequately" justify its decision to deny the conversion of the GBTC Trust into an ETF. One of the main arguments was that the SEC had already approved other Bitcoin-related products such as a futures ETF which is 99% correlated with the Bitcoin spot market.

The decision provided yesterday could potentially pave the way for the authorization of a Bitcoin Spot ETF but the SEC still has an opportunity to appeal the ruling.

The SEC has already proven time and time again its unfriendly stance on crypto, so it remains a question whether they will provide more compelling reasons for its rejection.

That said, the court ruling is a clear win for the crypto community and the SEC now faces a more difficult time rejecting future applications - Especially since applicants have now been shown that the decisions made by the SEC can be contested in court.

Too many losses like the one yesterday will damage the SEC’s credibility so my hopes are that the decision will be taken as a chance to save face and welcome the long-awaited spot ETFs. 

Noteworthy Mentions 

  • Wall Street Going Web3: The Rise of Institutional Crypto Adoption 

    As the debate over whether the SEC will finally approve a Bitcoin Spot ETF intensifies, institutions are already preparing for the digital asset market. Our latest analytical piece delves into current crypto institutional adoption trends, including the amount of capital already allocated. For a comprehensive overview, check out the article here.

Industry Shakers 

  • DCG Agrees with Genesis creditors to deliver recoveries of up to 90%

    DCG, the main entity behind the now defunct Genesis Global Holdco, is in preliminary talks to resolve claims with its creditors, court documents indicate. DCG's proposal encompasses a two-year, $328.8 million primary debt facility, a seven-year, $830 million secondary facility, and four payments totaling $275 million.

  • Indian PM Modi calls for global cryptocurrency framework at G20 Summit

    During the recent G20 summit, Indian Prime Minister Narendra Modi stressed the need for global unity in creating cryptocurrency regulations. As the G20 president, India is pushing for a worldwide framework for managing digital currencies. In an interview with a local paper, Modi noted that technologies like blockchain have global implications, and thus, their regulation should be international.

  • Western Union partners with Ripple and XRP

    In a notable step, global finance leader Western Union is partnering with Ripple and its XRP currency. CEO Hikmet Ersek stated that crypto's role in future finance is undeniable. The company has been testing Ripple products, including xRapid, which aims to accelerate international transactions.

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Author of the Bitcoin Global Macro, a newsletter focusing on bitcoin, macro insights & investment ideas in the digital assets space.

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