Investment management company BlackRock has a 50% chance of securing approval for its Bitcoin (BTC) Exchange Traded Fund (ETF), according to Bloomberg senior ETF analyst Eric Balchunas. Balchunas’ prediction is based on the expectation that the US Securities and Exchange Commission (SEC) may be more inclined to approve BlackRock’s ETF as a way to “save face” after rejecting Grayscale’s application. Elliott Stein, a senior litigation analyst for Bloomberg Intelligence, estimates that Grayscale has a 70% chance of winning its case against the SEC.
Grayscale and the SEC have been involved in legal disputes since June 2022, when the agency rejected Grayscale’s application. After oral arguments were heard by three federal appellate court judges on March 7, Stein noted that Grayscale’s chances of success increased to 70% based on the judges’ lines of questioning. Bloomberg expects a decision on the case to be made by August.
The approval of Bitcoin ETF applications has been a major focus in the cryptocurrency industry recently, with multiple financial institutions, including Fidelity, Invesco, Wisdom Tree, Valkyrie, and BlackRock, seeking approval from the SEC. If these applications are approved, it would expose the digital asset market to firms with a combined $27 trillion in assets under management, including JPMorgan, Morgan Stanley, Goldman Sachs, BNY Mellon, and Bank of America.
During the ongoing legal battle, Grayscale’s Bitcoin Trust (GBTC) has seen a surge of over 134% in 2023, reaching $19.47, its highest price since May 2022. The discount of GBTC’s share price compared to its net asset value also dropped to 31% on June 26, the lowest level since September 2022. This decrease in the discount rate indicates a potentially more positive sentiment among investors towards the product.
However, like the broader crypto market, GBTC is down more than 65% from its all-time high price of $56.70.
In summary, BlackRock has a 50% chance of obtaining approval for its Bitcoin ETF, while Grayscale’s chances of winning its case against the SEC are estimated at 70%. The approval of these applications and others could bring significant institutional exposure to the digital asset market. GBTC has experienced considerable price movements, with a surge in 2023 and a decrease in the discount rate, but it remains significantly below its all-time high.
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