Spot Bitcoin ETFs: Will the SEC approve or buy more time?

As the U.S. Securities and Exchange Commission (SEC) stands at the brink of a pivotal crypto decision, the crypto sphere is abuzz with anticipation regarding the approval of spot Bitcoin exchange-traded fund (ETF) applications.

With a window open until Nov. 17, the SEC is evaluating a dozen applications, including Grayscale’s conversion of its GBTC trust product.

Will the SEC finally greenlight a spot BTC ETF?

While approval of a spot Bitcoin ETF is not assured, the decision by the SEC is eagerly anticipated by both regulators and cryptocurrency enthusiasts.

The initial rejection of the first Bitcoin ETF filing in 2017 was driven by concerns over the lack of regulation in crypto markets and the potential for market manipulation. It also marked the beginning of an intricate and continuous regulatory journey. 

However, the regulator has voiced concerns about the ability to consistently track and ensure the safety and custody of assets. Additionally, questions have been raised about the resilience of trading venues and the Bitcoin market’s capability to manage the increased volume that would result from the introduction of a spot ETF.

The SEC has an eight-day window from Nov. 8 to Nov. 17 to approve the first spot Bitcoin ETF, even if the decision is delayed beyond Nov. 17.

Analysts at Bloomberg predict that if a spot Bitcoin ETF is not approved in this period, there’s still a 90% chance for approval by Jan. 10, 2024.

In June, the demand for a spot Bitcoin ETF reemerged with a BlackRock filing, sparking a flurry of filings from other issuers vying to secure approval from the SEC.

BlackRock’s bid for a spot Bitcoin ETF has generated optimism for approval, yet experts hold differing views on the likelihood of its acceptance. 

The SEC, in response to filings from asset managers, has expressed reservations, asserting that the applications lack clarity and require additional information for consideration. 

Experts say the SEC could rule on filings for a spot Bitcoin ETF over the next few months, as deadlines quickly approach.

Despite fresh speculation that the SEC is due to soon say something about applications from asset managers inducing BlackRock and Fidelity because of a rebuttal period that ended this week after they were most recently delayed in September 2023.

Currently, the market is heating up for near-term approvals of spot Bitcoin ETFs, with potential implications for crypto prices and market dynamics. The approval of spot Bitcoin ETFs is expected to have a significant impact on retail investment in the Bitcoin market and could potentially influence investor behavior and market sentiment. 

As the SEC’s decision on fund managers spot ETF offerings by Nov. 17, remains uncertain, market analysts are closely monitoring the regulatory developments and potential implications for the crypto market.

Schiff predicts another dip

Euro Pacific Capital CEO Peter Schiff recently issued a warning of an impending market crash as Bitcoin approaches $38,000 and leading contenders for a spot Bitcoin ETF brace for potential approval.

Schiff, a well-known critic of cryptocurrencies, anticipates that the introduction of a Bitcoin ETF will precede a significant downturn in the crypto market.

He acknowledges the gradual climb of Bitcoin towards the $38,000 mark, driven by expectations of a spot Bitcoin ETF approval from the SEC.

Despite this, Schiff contends that by the time the ETF is launched, many early spectators will have already purchased Bitcoin. As these early buyers seek to sell for a profit, Schiff predicts a scarcity of buyers for the ETF, leading to a market crash.

However, Schiff’s forecast has faced opposition from various cryptocurrency investors who caution against relying on this prediction, dismissing it as another addition to a series of inaccurate forecasts made by the economist.