The Ruling and Its Significance
Bitcoin experienced a significant surge, rising nearly 7% to $27,910 after a US court ruled that the SEC was wrong to reject Grayscale's application for a spot bitcoin ETF. The court found the regulator's decision arbitrary and capricious as it failed to clarify the differing treatments between bitcoin futures ETFs and spot bitcoin ETFs.
Tim Bevan, CEO of ETC Group, expressed confidence that spot BTC ETFs would soon be available in the US despite a potential SEC appeal. Bevan anticipates that the SEC will most likely approve all applications meeting the requirements by Q1 2024. He also expects that the pent-up demand in the US will positively impact bitcoin prices and contribute to the global recognition of cryptocurrency as a new asset class.
SEC Response and Appeal Process
The SEC did not respond immediately to comment requests. Both parties have 45 days to appeal the ruling, which could then be reviewed by the US Supreme Court or an en banc panel. It remains uncertain whether the SEC will appeal the decision.
Background on SEC Rejections
The SEC had previously rejected Grayscale's application, arguing that it did not meet anti-fraud and investor protection standards. This reasoning was also used to deny several other similar applications from companies like Fidelity and VanEck.
Impact on Other Cryptocurrencies
Ether, the second-largest cryptocurrency by market capitalization, also experienced a boost, rising about 5% to $1,730.50 and reaching a two-week peak of $1,735.60. This surge came despite recent slumps in both bitcoin and ether due to expectations of the Federal Reserve maintaining higher interest rates amid elevated inflation.
Despite the sharp gains on Tuesday, both Bitcoin and ether have experienced declines this month, dropping 6% and nearly 8%, respectively. This decrease is attributed to a broader risk-off move, influenced by expectations that the Federal Reserve will maintain higher interest rates for a more extended period due to persistently high inflation.