Grayscale vs. SEC: The Battle Over Bitcoin ETFs

Bitcoin’s $2K Plunge: Another Ride on the Crypto Rollercoaster

Grayscale’s proposed Bitcoin ETF has the crypto world buzzing with interest. Why? Because the U.S. District of Columbia Court of Appeals decided the SEC was wrong to reject Grayscale’s application.

So, what’s the drama? Grayscale wants to launch a spot Bitcoin ETF that follows the movements of Bitcoin on the Chicago Mercantile Exchange (CME). Now, the CME is like the watchful big brother, ensuring there’s no naughty stuff happening with price manipulations. Grayscale claims their Bitcoin ETF would be super safe for investors due to this oversight.

The SEC (Securities and Exchange Commission) denied Grayscale’s application for a spot ETF, saying they are unsure if CME can genuinely keep a lookout for any sneaky behavior in the Bitcoin market. This also happened to other ETF applications (Invesco, Fidelity, etc.) but Grayscale was the only firm to sue the SEC.

The court jumped in and sided with Grayscale, saying that the SEC was “arbitrary and capricious”. This mostly comes because the SEC had already approved Bitcoin futures ETFs. Grayscale’s argument was that the same safeguards approved for a futures ETF should be enough for a spot ETF. After all, both of them track the underlying price of the same asset: Bitcoin. The court agreed that the two ETFs are “materially similar”.

The SEC has 45 days to appeal and depending on what they decide, this could change the game for other big boys, like BlackRock and Fidelity, who are also waiting on a decision regarding their Bitcoin ETF proposals.

This ruling could set a trend If Grayscale’s Bitcoin ETF gets the green light, it might pave the way for other Bitcoin ETFs, which would bring in a plethora of new players and an influx of capital. With more eyes on Bitcoin and crypto in general, things could heat up rather quickly.

Chart Analysis – BTC/USD

In recent days, Bitcoin did a full 180, first climbing from $26,000 to $28, 000 in a single day and then back to $26,000 in the following two days. The initial climb was probably due to the Grayscale “win” over the SEC, but it proved to be short-lived.

The pair has formed a base around $25,500 – $25,300 and if the current bearish move extends past this base (support), we will probably see an extended drop. If this is the case, the next destination will likely be $25,000, followed by the lower Bollinger Band.

Don’t forget that the Non-Farm Payrolls report will come out today at 12:30 pm GMT and it will likely have an impact on BTC/USD.