A Bitcoin ETF will likely be approved in the U.S. by the end of 2023. The general public has no idea this is about to happen. Even crypto natives, dismayed by depressed markets and a decade of rejections by the Securities and Exchange Commission, are somehow brushing off the current state of affairs.<\/p>\n
Bitcoin exchange-traded funds have been highly sought after since 2013 when the first application was submitted to the SEC and subsequently rejected. Over the past 10 years, the SEC has denied each of the several dozen ensuing proposals, including over 30 just since 2021.<\/a> There are currently 10 active applications from major institutions. An uninformed observer may expect more of the same rejection, but this would be naive.<\/p>\n Two substantial developments in the past three months have drastically improved the prospects of an approval. Let\u2019s take a look at these developments and consider whether or not a spot ETF could revitalize Bitcoin and lift crypto out of its bear market.<\/p>\n Momentum kicked off on June 15 this year when BlackRock made waves by unexpectedly submitting a Bitcoin ETF application.\u00a0<\/p>\n BlackRock CEO Larry Fink has spoken favorably<\/a> about Bitcoin since then. Bitcoin \u201chas a differentiating value versus other asset classes, but more importantly, because it\u2019s so international it\u2019s going to transcend any one currency,\u201d Fink said. His change of tune is remarkable as he previously denounced Bitcoin<\/a> as an \u201cindex of money laundering\u201d back in 2017.\u00a0<\/p>\n BlackRock\u2019s track record of ETF application approvals is nothing short of superb. The asset management giant has submitted 576 applications and all but one have been approved<\/a>. Have the Bitcoin ETF tea leaves adjusted, and BlackRock taken note? BlackRock\u2019s 99.8% approval rate suggests so.<\/p>\n Several other high-profile institutions including Fidelity and Ark Invest have followed suit with pending applications under review. Their filing dates and decision deadlines are largely identical. There are four deadlines during the review process in which the commission may, and often does, opt for delay and further review.\u00a0<\/p>\n Whether the SEC decision arrives early or not until final deadlines, the caliber of the institutions currently applying and their optimism are signaling one result: approval.<\/p>\n A separate but equally significant development in the direction of ETF approval is the Aug. 29 federal court ruling that the SEC was wrong<\/a> to deny Grayscale Investments\u2019 filing for a spot Bitcoin ETF.\u00a0Grayscale previously applied to convert their Grayscale Bitcoin Trust (GBTC) to an ETF.\u00a0 The SEC denied this application, and Grayscale responded with a lawsuit arguing that the decision was incorrect. The U.S. Court of Appeals for the District of Columbia sided with Grayscale in its decision<\/a> stating \u201cIn the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.\u201d The court also ruled that the SEC\u2019s \u201cdenial of Grayscale\u2019s proposal was arbitrary and capricious.\u201d<\/p>\n The court ordered the SEC to once again review Grayscale\u2019s application, effectively reversing the previous rejection.<\/p>\n While the ruling does not equate to automatic approval, it strengthens the odds that approval is on the horizon. The SEC would need to provide strong support for further rejection. This begs the question: If such support exists, would it not have been included in their original rejection?\u00a0<\/p>\n While the SEC recently delayed all ETF applications on Sept. 1, as most applicants\u2019 first deadline for review was on Sept. 2, the delays were largely expected. The market responded accordingly with Bitcoin dropping about 5% from the delay announcement to around US$25,700 at the time of this writing. Despite the delays, the path to a spot ETF approval is much clearer after Grayscale\u2019s win in court. JPMorgan analysts believe this<\/a>, as well as former SEC Chair Jay Clayton who says approval is \u201cinevitable.\u201d<\/a><\/p>\n It is reasonable to expect the SEC to approve several or even all of the filings at once. The applications are structured very similarly, and it may be considered unfair to grant any of the applicants a head start. Cathie Wood, the CEO of Ark Invest, told Bloomberg<\/a>: \u201cI think the SEC, if it\u2019s going to approve a Bitcoin ETF, will approve more than one at once.\u201d Ark Invest has the earliest \u201cfinal deadline\u201d for its filing, which is slated for Jan. 10, 2024.<\/p>\n Eric Balchunas, a senior ETF analyst for Bloomberg Intelligence, believes there is a 75% chance of a spot Bitcoin ETF getting SEC approval this year. He ups the odds to 95% by the end of 2024.<\/p>\n If SEC approval is inevitable, how might we expect markets to respond?<\/p>\n Bitcoin ETFs already exist in the European Union, Canada, Brazil and Dubai. But as the U.S. is the center of world financial markets, including crypto markets, approval by its government would undeniably be a major event.\u00a0<\/p>\n An ETF would shuttle new money into Bitcoin. While crypto exchanges such as Coinbase are the primary avenue for entering crypto today, the average American understandably has trust issues with them. KYC (know-your-customer) procedures and having to transfer funds to purchase crypto are also onerous as opposed to simply buying an ETF share. Crypto wallets<\/a>, private keys and self-custody complicate matters further.<\/p>\n The institutions applying for a Bitcoin ETF deeply understand these hurdles. They know an ETF is an opportunity for a large segment of the population, who have thus far remained sidelined, to comfortably begin adding crypto exposure to their portfolio.<\/p>\nDevelopment 1: BlackRock<\/strong>\u2018s ETF bid<\/h4>\n
Development 2: Grayscale<\/strong>\u2018s court win<\/h4>\n
Odds of approval<\/strong><\/h4>\n
![\"Screen](\"https:\/\/forkast.news\/wp-content\/uploads\/2023\/09\/Screen-Shot-2023-09-07-at-1.22.09-AM.png\" "\\"Bitcoin")
<\/figure>\nWhat crypto markets will do, post-ETF<\/strong><\/h4>\n