Bitcoin, which jumped following Grayscale’s court victory over the Securities and Exchange Commission that many believe will lead to a flurry of Bitcoin spot ETFs entering the market, has since sputtered, erasing all gains.
Following the decision on Tuesday, in which a federal court ruled that the agency unreasonably denied Grayscale’s application to launch a spot Bitcoin ETF, the top cryptocurrency jumped as much as 8%, to $28,000, in just a few hours. It’s been all downhill since.
On Thursday, the SEC delayed seven applications to create a spot Bitcoin ETF, including from the world’s largest asset manager, BlackRock. The agency has until mid-October to make a decision on whether to approve spot Bitcoin ETF applications from BlackRock and other TradFi firms like Fidelity and VanEck.
In roughly a day, the SEC’s latest decision has erased all gains since Tuesday, with Bitcoin tumbling from about $27,400 to $25,700, where it had been prior to the ruling. Bitcoin was trading near $25,900 on Friday morning.
The GBTC court decision ultimately bolstered Bitcoin prices by zero percent pic.twitter.com/odiezqM7ft
— Joe Light (@joelight) September 1, 2023
The decline comes even as some analysts predicted that the odds of the SEC approving a spot Bitcoin ETF by the end of the year had increased following the court’s decision. Bloomberg senior ETF analyst Eric Balchunas wrote in a post on X (formerly Twitter) that he believed the odds had risen to 75%.
NEW: @JSeyff & I are upping our odds to 75% of spot bitcoin ETFs launching this yr (95% by end of '24). While we factored Grayscale win into our prev 65% odds, the unanimity & decisiveness of ruling was beyond expectations and leaves SEC w "very little wiggle room" via @NYCStein pic.twitter.com/IyEGmWjuHa— Eric Balchunas (@EricBalchunas) August 30, 2023
Many investors had hoped Grayscale’s victory would lead the SEC to rapidly approve a spot Bitcoin investment product, which it has still not done, at least as its lawyers stated in court, out of fear of market manipulation. Some believe that the entry of an ETF that actually holds Bitcoin, instead of relying on derivatives that track its price, has the potential to bring an influx of investors and capital into the crypto market. For now, they’ll have to continue to wait and see.