Valkyrie’s Chief Investment Officer, Steven McClurg, has suggested that the Securities and Exchange Commission (SEC) is on the verge of granting approval for a long-awaited spot Bitcoin exchange-traded fund (ETF). This approval is anticipated towards the end of this month.
Bitcoin’s value has seen a significant surge over recent months, primarily fueled by the anticipation of approval for a spot ETF, doubling in worth since the beginning of 2023.
Unlike existing Bitcoin futures ETFs, which invest in derivative contracts, a spot Bitcoin ETF directly holds the digital currency. Prominent financial institutions, including BlackRock, Fidelity, ARK Invest, and Grayscale, have all submitted applications to introduce spot Bitcoin ETFs.
This comes in spite of years of SEC rejections, driven by worries related to potential market manipulation and the acquisition of dependable pricing data.
The full launch of the Spot Bitcoin ETF is expected in February 2024. McClurg speculates that the SEC will issue additional comments to applicants within the next few weeks.
Spot Bitcoin ETF Progress and Market Outlook
McClurg is of the view that the long-standing debate regarding market manipulation and custody matters has significantly diminished. However, some experts caution that these factors, particularly the risk of manipulation, might still pose obstacles.
Currently, the SEC is reviewing 8-10 spot Bitcoin ETF applications. Recent revisions have expanded their attention.
They now consider risk disclosures, underlying benchmark sources, pricing methodologies, custodial agreements, and other specific details. These adjustments have been made in response to the SEC’s requests.
McClurg predicts that spot Bitcoin ETFs could attract up to $10 billion in investments within the initial 1-2 months post-launch.
Spot Bitcoin ETF: Prospects, Caution, and Market Development
Bitwise Asset Management’s CIO, Matt Hougan, forecasts that these newly established funds hold the potential to amass over $50 billion in cumulative inflows. This growth is expected to occur within a five-year timeframe. Furthermore, a larger influx is anticipated in the later years.
Amid the prevailing optimism concerning an imminent SEC approval, Hougan urges a degree of caution until the filings receive full approval.
He draws a comparison to being in the “red zone,” employing a football analogy. This prompts the question of whether they can indeed cross the finish line successfully.
Evolving Prospects for Spot Bitcoin ETF Approval and Market Impact
Large corporations have persistently requested spot Bitcoin ETF approval from the SEC. However, prior applications faced recurrent denials primarily due to worries regarding market manipulation and pricing concerns. McClurg contends that these issues have largely been resolved over the years.
For instance, he cites the SEC’s recent resolution of a manipulation lawsuit involving Genesis Global Trading, which pertained to the Grayscale Bitcoin Trust. This indicates a potential decrease in comparable manipulation issues.
For the moment, investors are eagerly awaiting the SEC’s next steps. With Bitcoin prices surging and heavyweight investors expressing interest, the demand is evident. Approval could open the floodgates to substantial new investments in the cryptocurrency market.