After Tuesday’s fake trial run, the Securities and Exchange Commission (SEC) approved 11 spot Bitcoin (BTC) exchange-traded fund (ETF) applications on Wednesday, setting the stage for the products to start trading on Thursday.
“Today, the Commission approved the listing and trading of a number of spot Bitcoin exchange-traded product (ETP) shares,” a statement from SEC Chair Gary Gensler said.
He noted that the regulator had previously disapproved “more than 20 exchange rule filings for spot bitcoin ETPs” since 2018, but said, “Circumstances, however, have changed,” citing the ruling by the U.S. Court of Appeals for the District of Columbia that “the Commission failed to adequately explain its reasoning in disapproving the listing and trading of Grayscale’s proposed ETP (the Grayscale Order).”
“Based on these circumstances and those discussed more fully in the approval order, I feel the most sustainable path forward is to approve the listing and trading of these spot bitcoin ETP shares,” he said.
“Importantly, today’s Commission action is cabined to ETPs holding one non-security commodity, Bitcoin,” Gensler said. “It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities. Nor does the approval signal anything about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws.”
Gensler also used this as an opportunity to warn about the risks of crypto and stressed that most tokens are subject to federal securities laws.
“As I’ve said in the past, and without prejudging any one crypto asset, the vast majority of crypto assets are investment contracts and thus subject to the federal securities laws,” he said. “While we approved the listing and trading of certain spot Bitcoin ETP shares today, we did not approve or endorse Bitcoin. Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto.”
According to the official filing from the SEC, 11 spot BTC ETF applications have been approved on an accelerated basis, enabling them to start trading on Thursday.
The response by Bitcoin price was muted, however, as traders still bruised from Tuesday’s whipsaw elected to avoid any potential volatility this time around, resulting in a flat reaction by BTC.
BTC/USD Chart by TradingView
“This approval order is based on all of the Exchanges’ representations and descriptions in their respective amended filings, which the Commission has carefully evaluated as discussed above,” the filing said. “For the reasons set forth above, including the Commission’s correlation analysis, the Commission finds, pursuant to Section 19(b)(2) of the Exchange Act,85 that the Proposals are consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange, and in particular, with Section 6(b)(5) and Section 11A(a)(1)(C)(iii) of the Exchange Act.”
“IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Exchange Act,87 that the Proposals (SR-NYSEARCA-2021-90; SR-NYSEARCA-2023-44; SR-NYSEARCA2023-58; SR-NASDAQ-2023-016; SR-NASDAQ-2023-019; SR-CboeBZX-2023-028; SRCboeBZX-2023-038; SR-CboeBZX-2023-040; SR-CboeBZX-2023-042; SR-CboeBZX-2023- 044; SR-CboeBZX-2023-072) be, and hereby are, approved on an accelerated basis. By the Commission.”
Muted response expected
Analyzing yesterday’s price action following the fake ETF approval announcement, QCP Capital noted that “The initial reaction to the 'approval' was muted with BTC being unable to trade out of the resistance area,” which they said is “a warning sign that an approval is mostly priced in and there may not be a huge rally post the approval.”
“We still look to ETH as a laggard play, and this seems to be validated by the performance of the ETHBTC cross following the fake announcement by the SEC,” they said. “While the ETHBTC cross briefly broke the June 22 low, it quickly traded back above the 0.051 support.”
The analysts noted that “options volumes are also elevated now due to the ETF news event, and we expect [volumes] to move lower and normalize once an ETF approval is out of the way. We see support at 40 - 42k, and resistance around 48.5k.”
In the event of a sizeable pullback, QCP Capital said Bitcoin “Below 38k is also a decent level to go long in anticipation of the halving in April.”
According to Tom Lee, managing partner at Fundstrat, BTC is primed to finally hit a six-figure price point in 2024 following the ETF approval and the halving.
“I think in the next 12 months, something over $100,000, maybe $150,000,” Lee said during an interview on CNBC. “And in the next five years, there’s a finite supply and now we have a potentially huge increase in demand with a spot Bitcoin [exchange-traded fund] approval, so I think in five years, something around $500,000 would be potentially achievable.”
