Bloomberg’s senior ETF analyst, Eric Balchunas, believes that BlackRock, an investment management firm, has a 50% chance of obtaining approval for its spot Bitcoin Exchange Traded Fund (ETF). Balchunas’ prediction is based on the observation made by Elliott Stein, a senior litigation analyst for Bloomberg Intelligence, who now assesses Grayscale’s chances of winning its case against the Securities and Exchange Commission (SEC) at 70%.
Balchunas suggests that the SEC may view BlackRock’s ETF filing more favorably as a means to “save face” by approving an ETF from a trusted traditional financial institution instead of Grayscale. The legal battle between Grayscale and the SEC began after the commission rejected Grayscale’s application in June 2022. Since then, both parties have engaged in legal filings and oral testimony, with three federal appellate court judges hearing the case on March 7.
Stein further stated that Grayscale’s odds of winning the lawsuit increased to 70% following the completion of oral arguments because all three judges on the panel appeared to align with Grayscale based on their lines of questioning. Bloomberg expects a conclusion to be reached by August.
The pursuit of Bitcoin ETF approvals has become a significant focus within the industry. In addition to BlackRock, other major asset management firms such as Fidelity, Invesco, Wisdom Tree, and Valkyrie are waiting for SEC approval. If the applications from firms like JPMorgan, Morgan Stanley, Goldman Sachs, BNY Mellon, and Bank of America are eventually approved, the digital asset market would be exposed to companies with a combined $27 trillion in assets under management (AUM).
While awaiting the outcome of Grayscale’s case, the Grayscale Bitcoin Trust (GBTC) has experienced a surge of over 134% in 2023, reaching $19.47, its highest price since May 13, 2022. The discount of GBTC’s share price compared to its net asset value also dropped to 31% on June 26, the lowest level recorded since September 12 of the previous year. This decrease indicates a potential improvement in investor sentiment towards the product.
However, like the broader cryptocurrency market, GBTC is down over 65% from its all-time high price of $56.70.
Summary
BlackRock stands a 50% chance of securing approval for its Bitcoin ETF, according to Bloomberg’s senior ETF analyst. Grayscale’s case against the SEC is expected to conclude by August, and if successful, it could have implications for the approval of Bitcoin ETFs. The industry awaits regulatory decisions that could open doors to significant institutional investment in the digital asset market.