BlackRock’s Bitcoin ETF Application Sparks Market Speculation
Client demand for cryptocurrency is soaring
In a recent interview with Fox Business, Larry Fink, CEO of BlackRock Inc, highlighted the increasing demand for cryptocurrency among clients. This surge in interest comes as rumors circulate about the Securities and Exchange Commission (SEC) approving BlackRock’s iShares spot ETF. The speculation has already caused Bitcoin’s price to surge from $27,900 to $30,000. Fink, who initially had reservations about cryptocurrencies due to potential illicit activities, now sees Bitcoin as a potential game-changer in the world of finance.
Spot Bitcoin ETFs under SEC review
The SEC is currently reviewing several spot Bitcoin ETF applications from firms including BlackRock, Valkyrie, VanEck, Bitwise, and WisdomTree. Notably, BlackRock’s application lists Coinbase as the custodian. Analysts such as James Seyffart from Bloomberg and Eric Balchunas predict a high likelihood of the SEC approving a spot Bitcoin ETF this year. This prediction is based on Grayscale’s recent legal victory over the SEC in the US Court of Appeals for the D.C. Circuit regarding the conversion of its GBTC into a spot Bitcoin ETF.
Bitcoin ETF launch generates significant interest
The potential launch of a Bitcoin ETF has caught the attention of many investors as it offers a regulated avenue to leverage Bitcoin’s price volatility without owning the cryptocurrency itself. On October 16, 2023, Bitcoin’s price briefly surpassed the $30,000 mark due to false rumors suggesting that the SEC had approved BlackRock’s iShares Spot Bitcoin ETF application. However, these rumors were quickly debunked, leading to an 8% drop in Bitcoin’s value, bringing it below $29,000. The SEC issued a stern warning against trusting internet rumors and emphasized that accurate information can only come directly from the SEC.
SEC’s struggle with Bitcoin ETFs
The SEC has been grappling with how to handle the increasing optimism surrounding Bitcoin ETFs. So far, the SEC has only been able to delay decisions on various applications. A significant turning point occurred when the Court of Appeals ruled in favor of Grayscale, preventing the SEC from denying its application to convert the Grayscale Bitcoin Trust into an ETF. This decision, which the SEC did not appeal, could set a precedent for other traditional sector companies, such as Invesco Ltd. and Franklin Resources, that are also waiting for SEC approval to enter the crypto market. BlackRock, being a major player, is closely watched in this race.
Predictions and expectations
JPMorgan analysts, led by Nikolaos Panigirtzoglou, anticipate that the SEC will likely approve a spot Bitcoin ETF in the near future. Galaxy Digital CEO Mike Novogratz goes even further, expecting approval by February at the latest, within “four to six months.” Novogratz collaborated with Invesco to submit an upgraded application to the SEC in June. The court ruling against futures-based Bitcoin ETFs and in favor of spot ETFs implies significant consequences if the SEC were to retroactively withdraw its previous approvals.
This article provides valuable insights into the current state of the cryptocurrency market, particularly regarding BlackRock’s Bitcoin ETF application and the SEC’s role in regulating such investments. It is clear that the demand for cryptocurrency is on the rise, and approval of a spot Bitcoin ETF could further boost its popularity among investors.
