The recent decision by the US Securities and Exchange Commission (SEC) to not appeal a ruling against them in the Grayscale case has brought the approval of spot Bitcoin ETFs in the US closer, according to JPMorgan’s research report released earlier this week.
The Road to Approval
JPM analysts predict that the first approvals for spot Bitcoin ETFs are likely to come before the 10th of January, which is the final deadline for the Ark 21Shares application. This follows the ruling by three judges at the DC Circuit Court of Appeals in August, stating that the SEC’s decision to allow Bitcoin futures ETFs while denying Grayscale’s application to transform its Bitcoin Trust into a spot Bitcoin ETF was “arbitrary and capricious”.
The SEC had until last Friday to appeal against this ruling, but they chose not to take any action. This has sparked hopes that the agency is shifting its focus towards approving spot Bitcoin ETFs instead of fighting against them.
JPMorgan’s report suggests that the SEC is likely to approve multiple spot Bitcoin ETF applications simultaneously to avoid providing an unfair advantage to any one ETF applicant.
The Impact on Bitcoin
The news of potential spot ETF approvals has had a positive impact on the price of Bitcoin. Currently trading in the mid-$29,000s, Bitcoin is on track to post gains of more than 8% this week. Traders and investors are optimistic about the approval of spot ETFs, which has bolstered market sentiment.
JPMorgan is not the only institution or industry name discussing the likelihood of near-term approvals. Galaxy Digital CEO Mike Novogratz expects approvals to come in before the end of 2023.
“The firms that have stepped forward with robust proposals for these products and services are among some of the biggest blue chips in financial services,” said Coinbase chief legal officer Paul Grewal. “That suggests that we will see progress there in short order.”
Applications from asset management giants like BlackRock, Fidelity, WisdomTree, and Vanguard have sparked optimism that the SEC is actively engaged in dialogue with applicants, increasing the likelihood of near-term approvals.
Lucy Hu, a senior trader at Metalpha, believes that the market’s confidence in ETF approval has increased. The news of the SEC’s no-appeal ruling on Grayscale, coupled with the upcoming deadline for spot ETF applications from major institutions, has further supported the positive sentiment surrounding Bitcoin.
Potential Future Growth
With probable Bitcoin ETF approvals on the horizon and the halving event in April, the crypto market could experience a robust bull market. Matrixport, a crypto service provider, has projected that the price of Bitcoin could rise to between $42,000 and $56,000 on the news of spot ETF approvals, potentially resulting in gains of 40-90% from current levels.
Furthermore, historical trends indicate that Bitcoin’s upside potential for 2024 could be even greater. Previous Bitcoin halvings have led to rallies and fresh all-time highs for the cryptocurrency. Additionally, as we move into 2024, the Federal Reserve’s interest rate hiking cycle is expected to come to an end and a cutting cycle may begin, potentially leading to lower interest rates. This macroeconomic tailwind could further benefit Bitcoin.
Other factors, such as Bitcoin being viewed as a safe haven by macro investors, despite downside in the US stock market, could also contribute to its growth. This suggests that a strong rally back to 2021’s record highs around $69,000 is a strong possibility in the coming year.
