Officials from the US Securities and Exchange Commission (SEC) met with three employees of BlackRock on Thursday to discuss the asset manager’s application to set up a spot Bitcoin Exchange Traded Fund (ETF), as per a memorandum released by the SEC on Friday.
The news of ongoing dialogue between the US regulator and BlackRock instills optimism that spot Bitcoin ETF approvals may come sooner rather than later.
A Turning Point for the Bitcoin Market
BlackRock’s application to establish a spot Bitcoin ETF, named the iShares Bitcoin Trust, in June marked a turning point for sentiment in the Bitcoin market this year. Given the asset manager’s influence on Wall Street and among regulators, it carried significant weight.
Unlike previous applications, BlackRock’s proposal introduces a new mechanism for trade monitoring, aimed at making market manipulation more difficult. This differentiator has sparked expectations that spot Bitcoin ETFs, including BlackRock’s, will secure approval in 2024. If approved, it could potentially unleash new institutional investments in the Bitcoin market.
Implications for Market Approval and Price Trends
The potential approval of spot Bitcoin ETFs and the influx of new institutional investments have created a bullish tailwind for Bitcoin in recent months. Despite current levels nearing $42,000 and a surge of nearly 70% from October’s lows, market analysts warn of potential risks.
JP Morgan analysts caution that spot ETF approvals may already be priced into the market and could lead to profit-taking, resulting in short-term pullbacks. Furthermore, confusing messages from the Federal Reserve regarding future rate cuts and rate hikes may introduce near-term downside volatility.
On the other hand, the approval of spot Bitcoin ETFs would undoubtedly open the door to major institutions, which had been waiting for a regulated spot product in the US, to enter the Bitcoin market. Additionally, potential bullish narratives surrounding the halving of BTC issuance rate and pro-BTC/crypto candidates winning the US elections next year could further bolster Bitcoin’s prospects.
