As the U.S. Securities and Exchange Commission (SEC) nears its deadline to make a decision on the spot Bitcoin exchange-traded fund (ETF) application by ARK Invest and 21 Shares, industry anticipation is at a peak. Bloomberg Intelligence senior ETF analyst Eric Balchunas recently voiced a strong sentiment, suggesting that the chance of the SEC rejecting the Bitcoin ETF proposals has dwindled to a mere 5%.
The SEC's decision, due on Wednesday, Jan. 10, is a pivotal moment for the cryptocurrency industry. Although there is a general consensus that the SEC might not approve a single application, the expectation is that a series of approvals could follow shortly after the deadline.
Balchunas' statement over the weekend marks an increased confidence in the approval of the Bitcoin ETF, downgrading the probability of rejection from 10% to 5%. This optimistic outlook was echoed by fellow Bloomberg Intelligence ETF analyst James Seyffart, who outlined potential scenarios in the event of a rejection. These scenarios range from ARK withdrawing its application to an unlikely intervention by the Biden administration.
The crypto community is closely watching the situation, with significant amounts wagered on decentralized prediction platforms like Polymarket. Here, users speculate on the outcome of various events, including the SEC's decision on Bitcoin ETFs. The market for bets on whether a Bitcoin ETF will be "approved by Jan. 15" has seen more than $1 million staked, with over 83% of users predicting approval.
Balchunas and Seyffart have held a consistent 90% confidence level in approval since October 2023, a stance bolstered by the landmark victory of Grayscale Investments against the SEC on the conversion of GBTC into an ETF. Balchunas reaffirmed this position in November, stating, "No, we still holding the line at 90% odds of approval by Jan 10 (aka this cycle), the same odds we've had for months."
As the deadline approaches, the financial world is bracing for a decision that could mark a significant milestone for Bitcoin and the broader cryptocurrency market. The SEC's ruling is not just about the approval of a financial product; it's a litmus test for the institutional acceptance of digital assets. Whether the SEC gives the green light or not, the implications will ripple through the market, potentially setting the tone for the industry's trajectory in 2024 and beyond.
