Bloomberg ETF analyst Eric Balchunas expressed confidence that the U.S. Securities and Exchange Commission (SEC) will approve a spot Bitcoin exchange-traded fund (ETF) before the deadline of January 15, 2024. He said that he has heard nothing to indicate anything but approval, and that he still thinks the chance of passage is as high as 90%, citing multiple mainstream journalists and internal sources.
Balchunas’s comments came in response to a report by Matrixport, a crypto investment firm, that said the SEC is likely to reject the applications for spot Bitcoin ETFs this month, and that it does not anticipate approval until at least the second quarter of 2024. Matrixport also predicted that a rejection would send Bitcoin prices crashing by 20%.
Several Applications Are Under Review by The SEC
A spot Bitcoin ETF would track the price of the underlying asset directly, unlike the Bitcoin futures ETFs that the SEC has already approved. Many investors and analysts believe that a spot ETF would be more beneficial for the Bitcoin market, as it would reduce the tracking error and premium issues that plague the futures ETFs. A spot ETF would also allow more institutional and retail investors to gain exposure to Bitcoin without having to deal with the technical and regulatory challenges of buying and storing the cryptocurrency.
The SEC has been reviewing several applications for a spot Bitcoin ETF, but has repeatedly delayed its decision, citing concerns over market manipulation, investor protection, and custody. The latest deadline for the SEC to approve or reject the applications is January 15, 2024. However, the SEC has the authority to extend the review period further, as it has done in the past.
A Pro-Crypto Director
Bloomberg Intelligence analysts have increased their odds of a U.S. spot Bitcoin ETF approval from 65% to 75%, citing recent developments that favor the crypto industry. They believe the SEC will have a hard time denying the applications, especially after losing a court case against Grayscale. A spot Bitcoin ETF would allow investors to directly access the underlying asset without intermediaries.
Balchunas said that he is not sure why Matrixport analyst is flipping so quickly, and that he does not agree with their pessimistic outlook. He said that he has seen positive signals from the SEC, such as the recent approval of a Bitcoin futures ETF by VanEck, and the appointment of a new director of the Division of Investment Management, who is reportedly more open to crypto innovation. He also said that he has spoken to several sources who are close to the SEC and the ETF industry, and that they have confirmed his bullish view.