JPMorgan: SEC May be Forced to Approve Bitcoin ETF
In the wake of a landmark ruling in favor of Grayscale, the United States Securities and Exchange Commission (SEC) faces growing pressure to greenlight various spot bitcoin ETFs according to JPMorgan.This shift in stance follows Grayscale’s successful legal challenge against the SEC.
Grayscale’s Recent Win
Grayscale’s recent court win posits a complex dilemma for the SEC: it could choose to reverse its earlier approvals of futures-based bitcoin ETFs, thereby defending its decision against Grayscale’s conversion proposal.
However, such a move would cast the SEC in an unflattering light, risking both disruption and public censure. Hence, as pointed out by JPMorgan analysts, the path of least resistance might well be the SEC’s sanction of pending spot bitcoin ETF applications, including Grayscale’s.
Court’s Standpoint on the SEC’s Rejection
Earlier this week, a federal court verdict emphasized that the SEC’s denial of Grayscale’s attempt to morph the Grayscale Bitcoin Trust (GBTC) into an ETF lacked solid justification.
The court highlighted that both futures and spot products in the bitcoin market bore similar risks due to their tight interrelation. The agency’s refusal to elucidate its differential approach towards seemingly analogous products led the court to label the SEC’s actions as “arbitrary and capricious”.
What Does the Future Hold?
The SEC, as of Thursday, announced its decision to postpone verdicts on spot bitcoin ETFs submitted by major entities such as BlackRock, Fidelity, and Invesco, setting the timeline to mid-October at the earliest.
JPMorgan analysts interpret this delay as an indicator that the SEC might opt for a simultaneous nod to several Bitcoin ETF applications, instead of singling out any particular contender.
This potential blanket approval promises to be advantageous for investors as the barriers to entry towards Bitcoin are lifted. And as the arena becomes more competitive, ETF fees could witness a downward trend. Specifically for Grayscale, this scenario could further pressurize them to reconsider their fees.
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Market Impact: A Sobering Outlook
However, while these developments herald a brighter future for spot bitcoin ETFs in the U.S., JPMorgan analysts caution against overly optimistic market predictions. Their observations highlight the lukewarm response such ETFs received in regions like Canada and Europe.
That said, even though Canada and Europe have shown mixed success with their adoption of spot Bitcoin ETFs, many industry observers remain bullish on Bitcoin’s future price trajectory. The anticipated halving event scheduled for next year historically sets the stage for a bull market in the Bitcoin cycle.
Coupled with this cyclical trend, the global expansion and recognition of Bitcoin ETFs could act as a catalyst, further fueling optimism and potential price appreciation in the broader cryptocurrency market.