Bitcoin’s value has soared more than 5% in response to the victory of Grayscale in a lawsuit against the United States Securities and Exchange (U.S SEC), hinting at the potential approval of a Bitcoin exchange-traded fund (ETF) in the U.S. Grayscale Investments LCC, the world’s largest crypto asset manager, is an American digital asset management company and a subsidiary of Digital Currency Group (DCG). Grayscale Investments LCC has been pushing to have the U.S SEC convert the world’s largest publicly traded bitcoin fund into an ETF.
Bitcoin’s Resurgence amidst Legal Triumph
On Tuesday, bitcoin price saw a significant surge following reports that the US Court of Appeals sided with Grayscale in a legal case against the U.S SEC. Grayscale, a prominent investment management company, has been working towards getting approval from the regulatory watchdog to create a Bitcoin spot ETF.
In just an hour, the value of bitcoin increased by over 5%, right from when the news bursted. This upward trajectory also mirrored gains in other prominent cryptocurrencies during the same timeframe.
During the summer months, bitcoin had exhibited an unusual lack of volatility, except in instances involving developments related to a spot ETF. Today’s development, signaling the reconsideration of the U.S SEC’s denial of Grayscale’s Bitcoin ETF application, is being hailed as a positive stride for investors. This breakthrough raises hopes for the introduction of a Bitcoin spot ETF within the U.S.
Grayscale took legal steps against the U.S SEC following the rejection of its request in 2022 to change its Bitcoin Trust into a spot Bitcoin ETF. The reason why there isn’t a Bitcoin ETF in the U.S is because the U.S SEC has been hesitant to give the green light, mainly due to worries about possible manipulation of the market.
Investors’ interest in a Bitcoin ETF is driven by the prospect of traditional market participants gaining exposure to cryptocurrency in a more secure manner. ETFs, as investment vehicles, enable the purchase of shares that mirror the underlying asset’s price. A Bitcoin ETF would permit investors to engage with bitcoin without the complexities of securing and safeguarding digital assets.
The Impact of BlackRock’s Application and Market Sentiment
In June, bitcoin hit its yearly peak, reaching $31,000 per coin. This surge was largely attributed to BlackRock, a major global asset management firm, submitting its application for a Bitcoin ETF to the SEC. The application was seen as a positive indicator of Wall Street’s growing appetite for cryptocurrency exposure.
However, bitcoin’s value experienced fluctuations due to regulatory updates and broader economic factors. Initially, investor optimism waned as the U.S SEC’s stance on swift approval of a spot ETF seemed unlikely.
Today’s announcement has rejuvenated the belief that a Bitcoin spot ETF may eventually secure approval within the U.S. The U.S SEC and Grayscale now have a 45-day window to appeal the recent court ruling, adding a layer of anticipation to the unfolding narrative.
Recent Progress and the Industry Landscape
The U.S SEC observed a notable surge in applications for spot Bitcoin ETFs in June 2023, driven by BlackRock’s initial submission. This prompted a competitive race, with players like Fidelity, WisdomTree, and Invesco swiftly entering the arena. Despite the growing interest and influx of applications, the U.S SEC’s cautious approach to approving a spot Bitcoin ETF has persisted for more than a decade.
The prolonged deliberation over regulatory frameworks has injected uncertainty into the cryptocurrency market. As the decision-making process continues to face delays, stakeholders within the industry eagerly await a definitive resolution that brings much-needed clarity.
BTC Price Analysis
Over the past week, bitcoin price has exhibited notable volatility, experiencing a commendable 5% increase and reaching $27,400, per data from CoinGecko. This positive movement is in stark contrast to the previous weeks of relatively subdued price action, where bitcoin demonstrated uncharacteristically low volatility.
The weekly Relative Strength Index (RSI) value of 43.7 indicates a balanced momentum, suggesting that the recent surge might not be overextended. Furthermore, the presence of a sturdy support level at $25,000 adds an element of reassurance, hinting at the potential for continued price stability around this threshold.
Bitcoin’s recent surge triggered by Grayscale’s legal victory over the U.S SEC highlights the potential pathway for the introduction of a Bitcoin spot ETF in the U.S. The cryptocurrency industry is keeping a keen eye on forthcoming developments as regulatory uncertainties gradually give way to clarity.
What All these Mean to the Investor
The recent victory of Grayscale in its lawsuit against the SEC carries significant implications for investors in the cryptocurrency space. The ruling marks a substantial step forward in the potential approval of a Bitcoin spot exchange-traded fund (ETF) within the United States. This development represents the prospect of accessing bitcoin exposure through a more secure and regulated avenue. An approved Bitcoin ETF would provide a user-friendly option for regular investors to enter the cryptocurrency world without the need to handle the intricacies of safeguarding their assets. This would tackle worries about securely storing and protecting investments. Regulatory bodies increasingly recognizing cryptocurrencies as valid investment tools further strengthens investor faith in the future potential of the digital asset market
Credit: Solomon Victor is a Technical Analyst who is also knowledgeable about various aspects of blockchain and cryptocurrency.
Photo: Brady Dale/Axios