The United States Securities and Exchange Commission (SEC) is facing increasing pressure to approve a spot Bitcoin exchange-traded fund (ETF), according to Bloomberg analyst James Seyffart. During a recent webinar with CryptoQuant, Seyffart strongly believes that the SEC will likely approve the Bitcoin ETF, estimating a 90% chance of approval in the coming week.
This development follows significant interactions between the SEC and asset managers and a legal setback for the SEC in August when it lost a court case against Grayscale regarding the conversion of its Grayscale Bitcoin Trust (GBTC) into a listed BTC ETF.
Seyffart’s perspective highlights the SEC’s narrowing options. The commission can either present new reasons for denial, persuade firms to withdraw their applications or approve the ETFs. Seyffart suggests that the first two options are unlikely, leaving approval as the most probable outcome. He further comments on the possibility of an unexpected denial, which he views as a remote, albeit concerning, possibility.
Potential impact of Bitcoin ETF approval
The approval of a Bitcoin ETF could significantly impact the cryptocurrency market. Seyffart anticipates that approval could lead to approximately $10 billion in inflows to Bitcoin ETFs in the first year. However, he also notes that the inflows are unlikely to exceed $100 billion in the initial years, drawing a comparison to the total value of gold ETFs in the U.S. This projection underscores the potential growth for Bitcoin ETFs while recognizing the limits of immediate market expansion.
Institutional investors’ cautious approach to new investment vehicles might lead to a gradual adoption of the Bitcoin ETF. Seyffart explains that these investors perform thorough due diligence before incorporating new assets into their portfolios. The process involves evaluating the assets against set criteria to determine their suitability for inclusion in investment strategies. This cautious approach suggests that while approval of the Bitcoin ETF could be a significant milestone, widespread adoption may not be immediate.
The final decision and market anticipation
The SEC’s final decision on the Bitcoin ETF applications is due by January 10. Seyffart anticipates a collective approval for all the applicants, except Grayscale, whose conversion might require additional time. The market is watching closely, as the decision could mark a pivotal moment for cryptocurrency investment in the United States.
The potential approval of a Bitcoin ETF is a topic of significant interest for both retail and institutional investors. The decision could provide a more regulated and accessible means for investors to gain exposure to Bitcoin, potentially increasing the cryptocurrency’s mainstream acceptance. As the deadline approaches, all eyes are on the SEC, waiting to see if they will open a new chapter in the history of cryptocurrency investment.
