The Future of Bitcoin Spot ETF: The Biggest Crypto Surges

The Future of Bitcoin Spot ETF: The Biggest Crypto Surges as Traders Await ETF Approval

17 October 2023

Over the past 24 hours, Bitcoin has climbed over 3% to above $27,800, breaking through the non-moving trading range of $26,000 maintained over the past week. Currently, the largest digital asset is above the key $28,000 mark, close to the price peak reached recently around $28,500.

Cryptos are still impacted by macro factors, with Bitcoin reacting along with the Dow Jones Industrial Average and S&P 500 to interest-rate expectations and the Middle East conflict. However, there are some new catalysts for cryptocurrency growth emerging.

The Securities and Exchange Commission (SEC) is currently under scrutiny as it faces crucial decisions regarding Bitcoin Spot ETF (ETFs). The potential approval of spot Bitcoin ETFs could have a profound impact on the cryptocurrency market, providing investors with a more accessible and regulated way to invest in Bitcoin. 

As well, the conversion of the Grayscale Bitcoin Trust into a Bitcoin Spot ETF is under consideration. This can potentially attract more institutional investors to the crypto market.

BlackRock, Invesco, and other financial giants applied for the first ETFs this summer, and the regulator could decide this month whether to approve them, as well as to appeal Grayscale’s court win that sets the stage for the trust’s conversion. The SEC reportedly doesn’t intend to appeal the federal court ruling, which has boosted Bitcoin’s price.

While Bitcoin futures ETFs have been around for several years, no Bitcoin spot ETFs that hold Bitcoin itself, rather than derivatives tracking the token, are not currently traded in the U.S., although interest from financial institutions and the legal framework has improved in recent months. The emergence of a spot Bitcoin ETF is expected to spark a new wave of investor interest in cryptocurrencies and lead to an increase in institutional investments.

The most telling sign that traders are turning bullish on Grayscale conversion was the shift in the Grayscale discount. 

Grayscale’s Bitcoin fund, a relatively illiquid trust, has been trading at a discount to its net asset value for nearly two years, but that discount has narrowed amid expectations that the SEC will decide whether to convert the fund to par. Grayscale’s discount fell to below 16% on Monday, down from nearly 19% at the start of October, its narrowest since December 2021.

Ether, the second-largest crypto, climbed 2% to $1,580, while Cardano and Polygon pushed 1% higher. Dogecoin and Shiba Inu also gained 1%.

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