In a recent episode of The Scoop podcast, Bloomberg Intelligence analysts James Seyffart and Eric Balchunas predicted that the SEC would likely approve a series of spot Bitcoin ETFs from January 5-10.
Seyffart and Balchunas’ predictions coincide with the final deadline for ARK and 21Shares applications, which were initially filed in April, ahead of other major players such as BlackRock in June in a field of 12 companies.
Seyffart speculates that the Securities and Exchange Commission (SEC) is strategically delaying its decision in order to coordinate multiple approvals simultaneously. This approach can prevent any single company from gaining an unfair advantage. Seyffart warns that if the SEC were to reject these applications, it would mark a significant change in approach, akin to “nuclearization.”
The SEC’s reluctance to play the role of kingmaker in the cryptocurrency ETF space reflects its efforts to remain neutral and impartial. Citing various sources, Seyffart believes that the SEC’s pattern of behavior, particularly observed during the Ether futures ETF approval process earlier this year, suggests the possibility of mass approval of Bitcoin spot ETFs.
The conversation also covered Grayscale Investments’ victory over the SEC, which could impact the approval of its Grayscale Bitcoin Trust (GBTC) product as a spot Bitcoin ETF. Seyffart points out that this case pushed the SEC into a corner and potentially accelerated approval.
However, given the differences in market robustness and underlying technology between Bitcoin (BTC) and Ethereum (ETH), the path for a spot ether ETF appears more complex. Seyffart remains optimistic, suggesting that approval for an Ether spot ETF is more likely to occur by the end of May 2024, but there is less certainty compared to a Bitcoin ETF.
Seyffart also explains that following approval of the SEC’s 19b-4 process, ETFs “must have an S-1 prospectus approved by the SEC’s Division of Corporate Finance before trading can begin.” This process may result in delays and may add uncertainty as to the exact timeline for the ETF’s market debut.
Seyffart expects there will be cautious initial uptake with regard to market acceptance due to rigorous due diligence processes from major brokerages and banks. However, he predicts that BlackRock could quickly include these ETFs on its various platforms, given its strong relationships with the industry.
Seyffart expressed confidence in the long-term success of these ETFs and expected significant capital inflows driven by hype and strategic interests from major asset owners.