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In a recent episode of The Scoop podcast, Bloomberg Intelligence analysts James Seyffart and Eric Balchunas predict a high probability that the SEC will approve a series of bitcoin spot ETFs between January 5 and 10.
Seyffart and Balchunas' prediction aligns with the final application deadline for ARK and 21Shares, initially filed in April, preceding other major players like BlackRock in June in a competitive field of 12 companies.
Seyffart speculates that the Securities and Exchange Commission (SEC) has been strategically delaying decisions, possibly to line up multiple approvals simultaneously. This approach would prevent a single company from gaining an unfair advantage. Seyffart warns that if the SEC were to deny these requests, it would represent a significant change in its approach, akin to “going nuclear.”
The SEC's reluctance to play a decisive role in the cryptocurrency ETF space reflects its efforts to maintain neutrality and fairness. Seyffart, citing several 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, which could speed up approvals.
However, the path for spot ether ETFs appears more complex, given the differences in market strength and underlying technologies between bitcoin (btc) and ethereum (eth). While optimistic, Seyffart suggests that ether spot ETF approvals are more likely towards the end of May 2024, although with less certainty compared to bitcoin ETFs.
Seyffart also explains that following approval of the SEC's 19b-4 process, ETFs “must have their S-1 prospectuses approved by the SEC's Division of Corporate Finance before trading can begin.” This process could introduce delays, increasing uncertainty about a precise timeline for the ETFs' market debut.
Seyffart anticipates cautious initial adoption in terms of market reception due to rigorous due diligence processes by major brokerages and banks. However, he predicts that BlackRock could accelerate the listing of these ETFs on various platforms, given its strong relationships with the industry.
Seyffart expressed confidence in the long-term success of these ETFs and projected significant capital inflows driven by both the hype and strategic interests of major asset owners.