Great news for the Grayscale Bitcoin ETF

Some decidedly positive news came out yesterday about Grayscale application to convert its Bitcoin Trust (GBTC) into an ETF on spot Bitcoin. 

In fact, it has been reported from unnamed sources that the SEC has reportedly opened talks with Grayscale in order to arrive at possible approval of the application.

Bitcoin ETF: the latest news on Grayscale’s application 

Grayscale created its GBTC in 2015, but it is not an ETF. 

In fact, ETFs are funds whose shares are exchangeable, whereas the Grayscale Bitcoin Trust is not. In fact, its shares can only be bought and sold OTC. 

For this reason, Grayscale in 2022 asked the SEC to be allowed to convert it into an ETF, but the SEC rejected this request. 

At that point Grayscale sued the SEC by taking it to court, and later, in late August 2023, the court agreed with Grayscale. 

In the meantime, the situation had changed, because in June, BlackRock also submitted its own request to the SEC to issue an ETF on spot Bitcoin. 

The fact is that BlackRock has an approval rate of over 99% for this kind of application, so there was a lot of optimism about it. 

So on the one hand there is a court ruling, against which the SEC has waived its appeal, that the Grayscale application in fact should be approved, while on the other hand there is also another application that has a very high probability of being approved. 

Note that it has been several years now that the SEC has refused to approve requests to issue spot Bitcoin ETFs in the U.S. market, and that there are still about a dozen that it has to rule on. 

The turning point

With the ruling in late August, the situation totally changed. 

That ruling in fact constituted a real turning point in this matter, with the SEC having to adjust and completely change its attitude. 

In fact, it began to do something it had never done in the past, which was to dialogue with those requesting to issue an ETF on spot Bitcoin, providing them with valuable feedback so that they could make their requests acceptable. 

This is also what appears to be happening with Grayscale, but there is more. 

From now until 17 November there is an “open window” for the possible approval of ETFs on spot Bitcoin. 

It is not certain that the SEC will choose to take advantage of it, not least because it usually takes all available time instead, but it cannot be entirely ruled out that approval could come by the middle of the month. 

In addition, the hypothesis that is popular is that of a possible mass approval, that is, in one fell swoop of all applications in this sense that have all the requirements in order to be approved. In this way, the SEC would not give any advantage to any issuer. 

Timelines

To tell the truth, although it appears that dialogue has been open for weeks between the SEC and some of the applicants, there does not seem to be the technical time frame for getting all applications in order by the middle of the month so that the SEC can approve them en bloc. 

Although it cannot be completely ruled out that something like this could happen, it seems that the greatest likelihood is still for a mass approval in late December or early January. 

It has to be said, however, that there might not be much difference if approval were to occur a few weeks earlier, or a few weeks later, not least because the final deadline seems to be 10 January. 

In fact, the markets have already largely started to price this hypothesis, although the timing is not yet clear in the short term. 

Crypto news: the impact on Bitcoin’s price of Grayscale’s ETF

Upon the release of the Grayscale news yesterday, the price of Bitcoin jumped again, making new yearly highs at $36,800.

Actually, the price of Bitcoin has been climbing almost continuously for four weeks now, so much so that the cumulative gain over the past 30 days has risen to 31%.

Although it is still -47% from the highs, it has already made a remarkable +121% since the beginning of the year, making it the second largest cryptocurrency by percentage of gains in the year among the top ten by market capitalization, surpassed only by Solana. 

Moreover, not only are the current values the highest in 2023, but they are also in line with those of January 2021. 

Indeed, in 2021 itself, in the midst of the last big bullrun, after the first peak in April, the price of BTC fell all the way below $30,000 between May and July, with the actual bursting of the speculative bubble occurring in May 2022 with the implosion of the Terra/Luna ecosystem crypto. 

Well, prior to that implosion, the price of BTC was around $40,000, which is a figure not very distinct from what it is today. 

In other words, while the price of Bitcoin has already almost recovered all the losses following the 2022 implosion, although it has not yet returned to all-time highs, it has also returned to the values of January 2022, i.e., when it fell precisely below $35,000 simply because the speculative bubble had begun to deflate.