A Bitcoin ETF appears like it may finally become a reality. WTF!
As crypto has mounted a comeback in late 2023 and now early 2024, Bitcoin prices have once again topped $43,000—an increase of almost 160% from a year ago. A large part of that rally is due to the anticipated approval and listing of Bitcoin ETFs, or exchange-traded funds, which would allow retail investors to gain exposure to Bitcoin without owning the cryptocurrency directly.
This week, that anticipation has reached a fever pitch as there are signs that the Securities and Exchange Commission (SEC) has been meeting with officials from the major securities exchanges, according to a news report. Also, Grayscale Investments—which is seeking approval for its Bitcoin ETF—recently filed its Form 8-A (a required piece of paperwork that must be filed before a security can be offered) with the SEC, in another indication that things may be coming together. And additionally, Grayscale has reportedly been in talks with investment banks JPMorgan and Goldman Sachs about potential roles in launching and managing the ETF.
It’s unclear what will happen next, as the SEC has taken a fairly combative and skeptical view of cryptocurrencies. In recent years, it has filed lawsuits against crypto platforms like Binance and Coinbase for operating as unlicensed exchanges, and charged individuals with insider trading. The key date to watch, however, is January 10, which is the deadline that the SEC set to determine whether to approve a Bitcoin ETF application filed by ARK Investment Management and Swiss crypto manager 21Shares. If that application is approved, it’s likely that others will be, too.
As for what the experts think? Some analysts insist that the odds are good that the ETFs will be approved and launched this year. Eric Balchunas, a Bloomberg senior ETF analyst, wrote on X last August that the odds of approval are 95% by the end of 2024—and those odds continued to improve over the course of the year.
Others, though, aren’t so sure. Markus Thielen, head of research at crypto financial services firm Matrixport, wrote in a report published on January 3 that he thinks the SEC will deny the ETF applications. “While we have seen frequent meetings between the ETF applicants and staff from the SEC, which resulted in the applicants refiling their applications, we believe all applications fall short of a critical requirement that must be met before the SEC approves,” Thielen writes. “This might be fulfilled by Q2 2024, but we expect the SEC to reject all proposals in January.”