GBTC Becoming A Bitcoin ETF Imminent As SEC Won't Appeal Loss In Grayscale Case

The Grayscale Bitcoin Trust (GBTC) could be on its way to becoming a Bitcoin exchange-traded fund (ETF) since the U.S. Securities and Exchange Commission (SEC) has decided not to appeal a federal court ruling.

The SEC will not ask the federal court to reconsider its August ruling that will allow Grayscale Investments to launch a spot Bitcoin ETF, Bloomberg reported, citing a person familiar with the matter.

The regulator was given until midnight last Friday to submit a challenge to the court's decision that found it was unjust for the financial regulator to reject Grayscale Investments' application to create a spot bitcoin exchange-traded fund.

The SEC's decision now clears the way for the first spot Bitcoin ETF in the U.S. although a separate approval order from the regulator is still required.

Following the news, Bitcoin immediately traded in the green zone at over $27,000.

So, what will happen next?

Industry watchers think a dialogue between the SEC and Grayscale would follow suit. While the financial regulator could still appeal the decision in the Supreme Court, Bloomberg Intelligence ETF analyst James Seyffart does not think the SEC will do such a thing. He anticipates that the dialogue could start as early as this week.

"No. I do not think they will appeal to the Supreme Court either," Seyffart said. "Dialogue between Grayscale and SEC should begin next week. Hoping for more info on the next steps sometime next week or the week after."

Following the court's decision in August, Seyffart and his fellow Bloomberg ETF analyst Eric Balchunas increased their odds of a Bitcoin ETF approval this year to 75% from 65% and raised the odds of an approval by the end of 2024 to 95%.

"The chances of the SEC approving spot Bitcoin ETFs this year have risen to 75% from 65% following Grayscale's court win, we believe, while odds by the end of 2024 reach 95%. The judges unanimously repudiated the SEC's arguments, and the agency will struggle to justify further denials as it faces deadlines, negative PR and Hashdex's novel approach," the analysts said.

"While we factored Grayscale win into our prev 65% odds, the unanimity and decisiveness of ruling was beyond expectations and leaves SEC with 'very little wiggle room,'" Balchunas added.

Bitcoin erased its gains from last Friday and was trading in the red zone at $26,857.07 as of 9:57 a.m. ET Sunday, with a 24-hour trading volume down by 39.01% at $5,145,289,804 – representing a 0.02% decrease in the last 24 hours and a 3.1% loss over the past seven days.

Its total circulating supply stands at 19,514,437 BTC, with its value down by 0.17% at a $524,022,048,296 market cap, according to data from CoinMarketCap.