Market Analysts Outline When The First Spot Bitcoin ETF Will Be Approved

In a recent development, analysts at asset management firm Bernstein have predicted when the US Securities and Exchange Commission (SEC) will likely approve the first Spot Bitcoin ETF.

According to the analysts, the pending Spot Bitcoin ETF applications could be approved early next year. They made this projection in line with the recent court ruling in the Grayscale case, which they believe could force the SEC’s hands. 

The court had ruled in favor of Grayscale in a case in which the asset manager argued that the Commission had acted arbitrarily and capriciously by not giving its Spot Bitcoin ETF application the same regulatory treatment it did to Bitcoin futures ETFs. As part of its ruling, the court ordered the Commission to review the application again.

Many saw this as a major win and proof that a Spot Bitcoin ETF was imminent, with Bloomberg analysts also weighing in and increasing the likelihood of these pending funds launching this year to 75%. They stated that “the unanimity and decisiveness of [the] ruling was beyond expectations,” with the SEC having little or nothing to hang on to.

The analysts at Bernstein also seem to adopt this view as they noted that the SEC would simply go the “middle route” and be more open to approving these ETFs rather than “inventing another reason for refusal” and sticking to the strict approach which they have taken on the crypto industry so far. 

This projection also seems feasible since the SEC must decide (approve or deny) on the ARK 21Shares Bitcoin ETF by January 10, 2024. 

Considering that the court has overruled the primary reason why the SEC has continued to deny these applications, the Commission might have difficulty coming up with another convincing reason to deny the application.

Before then, the SEC will be expected to decide on some pending applications in October. However, the Commission can delay its decision on them once again. 

Bernstein’s analysts also project the crypto asset management industry to grow from its current level (between $45 to $50 billion) to over $500 billion in the next five years. These ETFs, which they project could launch early next year, are part of the factors they believe could spur such growth.

According to them, there will be increased demand from institutional investors in crypto assets, and funds such as a Spot Bitcoin ETF will be their go-to option. A Spot Bitcoin ETF will allow these investors to invest directly in the flagship cryptocurrency in a regulated manner.  

In line with this, they expect the ETFs to hold 10% of the Bitcoin and Ethereum market cap and “5-6% share for liquid crypto hedge funds.”