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Bitcoin price touches $30,000 as launch of US crypto ETF seems imminent


The price of Bitcoin touched $30,000 levels yesterday before retreating and began trading today at $28,218, following the successful launch of a US-traded exchange-traded fund (ETF) investing directly in Bitcoin. This development marked another milestone after the regulatory body refused to appeal a judicial decision against it.

The US Securities and Exchange Commission (SEC) had an opportunity to appeal the federal appellate court’s August ruling that it was wrong to deny a request from the cryptocurrency company Grayscale Investments to convert its $16.7 billion Bitcoin Trust (GBTC) into a Bitcoin ETF. GBTC is the world’s largest cryptocurrency fund.

“I believe the SEC’s decision not to appeal indicates that the future launch of a publicly traded Bitcoin fund in the United States appears more likely,” said cryptocurrency analyst Rania Gule. “In addition to the ongoing interactions between the regulatory body and other asset managers seeking to launch exchange-traded Bitcoin funds, this is a sign that a US-traded Bitcoin fund is likely to enter the market shortly. We may also see new digital assets traded in early 2024 after years of the SEC rejecting such plans.”

Why was the SEC opposed to a GBTC ETF?

The SEC’s opposition to converting GBTC was based on the view that Bitcoin, traded on unregulated exchanges, is susceptible to fraud and market manipulation, whereas Bitcoin futures contracts were originally accepted for the primary retail fund because they are traded in regulated venues like stock exchanges and the Chicago Mercantile Exchange.

“In my opinion, the SEC’s decision not to appeal now leaves it with the option to oppose GBTC conversion for alternative reasons or ultimately approve it, which would open the door to many publicly traded Bitcoin investment funds,” said Gule. “Besides Grayscale, there are 10 other companies, including BlackRock, Fidelity, Ark Invest, WisdomTree, VanEck, and Valkyrie, that have submitted applications to launch Bitcoin ETFs.”

Many of these companies have recently adjusted their filings and provided assurances that their assets will be held in separate accounts by their bank and not commingled with the company’s or other clients’ assets. This has led to expectations that the SEC is interacting positively with these companies rather than planning to reject their applications outright.

Therefore, despite the possibility of the SEC citing other reasons to oppose and reject publicly traded Bitcoin investment funds, it has become increasingly difficult for them to do so, especially after effectively approving similar products traded on exchanges in Canada and Europe without any issues.

Bitcoin still looking strong vs other digital assets

The emergence of publicly traded Bitcoin investment funds in the United States may pave the way for more investments in the cryptocurrency space, as these funds are seen as a cost-effective and secure system, that could support the medium and long-term growth of Bitcoin and digital currencies.

BTC continues to exhibit strength compared to other digital assets, with its dominance increasing by 0.5% for the third consecutive week since the date of this publication. The Bitcoin dominance, which measures the relationship between Bitcoin’s market capitalisation and the total digital asset market capitalisation, presently stands at 51.4%, an increase from 50.9% a week ago, 50.4% two weeks ago, and 49.9% three weeks ago.

This news was well-received by investors, notably reflected in the narrowing discount of the Grayscale Bitcoin Trust (GBTC), which currently sits at 15.9%. This is the lowest level recorded since December 2021. The discount narrowing trend commenced in mid-June 2023 when BlackRock filed for its Bitcoin Spot ETF. Back then, the GBTC discount was approximately 43%.

The GBTC discount mirrors investor expectations regarding the potential conversion of the Bitcoin Trust into a Bitcoin Spot ETF.

“The significant reduction in the discount over the past few months, following Grayscale’s favourable outcomes against the SEC in court, reflects growing investor confidence in the possibility of Spot ETF approval in the future,” said Matteo Greco, a research analyst with Fineqia International in Canada. “Notably, the first final deadline for BTC Spot ETF approval or denial is set for January 10, 2024, concerning the ARK 21Shares filing.”

Several other filings, including BlackRock’s, have their next deadlines scheduled for mid-January, with the latest potential deadline set for mid-March.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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