Bitcoin ETF approvals anticipated in January; Ethereum in unique position
In a recent episode of The Scoop podcast, Bloomberg Intelligence analysts James Seyffart and Eric Balchunas predict a high likelihood of the SEC approving a series of spot Bitcoin ETFs between Jan. 5-10.
Seyffart and Balchunas’s prediction aligns with the final deadline for the ARK and 21Shares application, initially filed in April, preceding other major players like BlackRock in June in a competitive field of 12 firms.
Seyffart speculates that the Securities and Exchange Commission (SEC) has been strategically delaying decisions, possibly to align multiple approvals simultaneously. This approach would prevent any single firm from gaining an unfair advantage. Seyffart warns that if the SEC were to deny these applications, it would represent a significant shift in its approach, akin to “going nuclear.”
The SEC’s reluctance to play kingmaker in the cryptocurrency ETF arena reflects its efforts to maintain neutrality and fairness. Seyffart, citing various sources, believes that the SEC’s pattern of behavior, especially observed during the approval of ether futures ETFs earlier this year, indicates a likelihood of mass approval of Bitcoin spot ETFs.
The conversation also touched on Grayscale Investments’ victory against the SEC, which could influence the approval of its Grayscale Bitcoin Trust (GBTC) product into a spot Bitcoin ETF. Seyffart notes that this case has backed the SEC into a corner, potentially accelerating approvals.
However, the path for spot ether ETFs appears more complex, given the differences in market robustness and underlying technologies between Bitcoin (BTC) and Ethereum (ETH). While optimistic, Seyffart suggests that approvals for ether spot ETFs are more likely towards the end of May 2024, yet with less certainty compared to Bitcoin ETFs.
Seyffart also explains that following the SEC’s 19b-4 process approval, ETFs “must have their S-1 prospectuses cleared by the SEC’s Corporate Finance division before trading can commence.” This process could introduce delays, adding to the uncertainty of a precise timeline for the ETFs’ market debut.
Seyffart anticipates a cautious initial uptake regarding market reception due to the rigorous due diligence processes of major brokerages and banks. However, he predicts that BlackRock might expedite the inclusion of these ETFs on various platforms, given its strong industry relationships.
Seyffart expressed confidence in the long-term success of these ETFs, projecting substantial capital inflows driven by both hype and the strategic interests of major asset owners.
