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SEC Won’t Contest Grayscale’s Court Victory, Bringing Market Bitcoin ETFs Closer Than Ever
According to reports, the United States Securities and Exchange Commission (SEC) appears to have no plans to appeal the groundbreaking loss in Grayscale Investments’ case. An anonymous individual familiar with the situation has recently revealed, increasing the likelihood of Grayscale’s Bitcoin Trust (GBTC) being converted into a Market Bitcoin Exchange Traded Fund (ETF).
SEC Chooses Not to Appeal Grayscale’s Bitcoin ETF Decision
According to reports, the U.S. SEC has decided not to appeal the recent court decision in favor of Grayscale Investments.
According to a Reuters report citing an unnamed individual familiar with the situation, the SEC had until Friday to decide whether they would contest the loss. However, the securities regulator let that deadline pass without filing an appeal.
The D.C. Circuit Court ruled in August that the SEC’s denial of Grayscale’s proposal to transform GBTC into a market ETF was unreasonable and should be reviewed, describing it as an “arbitrary and capricious” rejection. The court argued that since the SEC had approved Bitcoin futures ETFs, it could not reject actual market-based products.
Now, with the SEC not planning to appeal, analysts believe the agency is likely to begin reviewing Grayscale’s application.
The price of Bitcoin surged by over 1.3% within minutes of the report on the SEC’s decision to forgo an appeal, reaching above the $27,000 mark.
It’s worth noting that Grayscale is also attempting to convert their Ethereum Trust into a market Ethereum ETF after the SEC approved the first Ethereum futures ETF on October 2.
Bloomberg Analysts Remain Optimistic About Market Bitcoin ETF Approval
Although the SEC will have to revisit Grayscale’s application, this does not mean that a market Bitcoin ETF will automatically be approved. The SEC could still reject it for different reasons.
Bloomberg ETF strategist James Seyffart commented on the X (formerly Twitter) platform: “I do not think they will appeal to the Supreme Court either. Dialogue between Grayscale and the SEC is likely to commence next week. We hope to receive more information about the next steps sometime next week or the week after.”
Moving forward, Seyffart indicated that the cryptocurrency community may find out within the next week or two the deadline for America’s top financial regulator to either grant regulatory approval or reject Grayscale’s market Bitcoin ETF request.
Seyffart, along with his Bloomberg colleague Eric Balchunas, previously predicted a 75% chance that a cryptocurrency market ETF would be approved this year. They give the product a 90% chance of approval by January 2024.
1. Done deal I guess if this is accurate. No en banc application
2. No. I do not think they will appeal to the Supreme Court either.
3. Dialogue between Grayscale and SEC should begin next week. Hoping for more info on next steps sometime next week or week after? https://t.co/2EayzqeKGq
— James Seyffart (@JSeyff) October 13, 2023
Ethereum has been following a downward trend against Bitcoin since August of the previous year, indicating that Bitcoin has been the more profitable investment during this period. Nevertheless, historical data suggests that a shift may be on the horizon, with Ethereum potentially approaching an accumulation phase.
>>> New Legal Milestones and Regulations: Signs of a Growing Cryptocurrency Market
Ethereum Price Trends
Currently, Ethereum is trading at $1600, which marks a 22% decline from its price in August last year. In contrast, Bitcoin has seen an 8% increase over the same timeframe.
This pattern is a common occurrence during bear markets. Cryptocurrencies with larger market capitalizations often demonstrate more resilience against price declines as investors become more risk-averse, seeking to safeguard their capital. While Ethereum’s market capitalization of $187 billion is substantial, it remains significantly lower than Bitcoin’s $525 billion.
During bull markets, cryptocurrencies with smaller market capitalization tend to outperform Bitcoin as investors gravitate towards assets with higher growth potential.
Ethereum’s Performance Relative to Bitcoin
A comparison of Ethereum’s value to Bitcoin’s reveals that Ethereum has been trading within a descending channel since last August. This pattern, characterized by lower highs and lower lows, is typically indicative of a bearish market trend.
The chart above illustrates three distinct phases:
- Accumulation phase: During this phase, prices tend to stabilize, hinting at an impending shift in market sentiment.
- Ascending channel: In this phase, prices experience a significant reversal, often following a parabolic trajectory with higher highs and higher lows.
- Distribution phase: In the final phase, prices cease their upward trajectory. Investors usually utilize this phase to capitalize on their gains and exit their positions.
The accumulation phase typically presents an ideal opportunity for investors to convert Bitcoin into Ethereum. During this phase, prices stabilize at their lowest point and then exhibit signs of a potential reversal. While Ethereum is still registering lower lows compared to Bitcoin, it has not yet entered the accumulation phase. However, the experiences of the previous cycle suggest that this shift may be forthcoming.
The Previous Cycle
Reviewing the previous cycle, Ethereum remained within a descending channel against Bitcoin for 17 months. The accumulation phase occurred from September 2019 to February 2020. Based on the four-year cycle theory, which proposes that similar market phases occur every four years, the upcoming accumulation phase may be just around the corner.
Nonetheless, it’s important to note that no two market cycles are identical. In the current cycle, Ethereum’s price action hasn’t experienced as significant a drop as in the previous cycle. This difference could be attributed to evolving fundamentals and the maturation of the asset.
Conclusion
Although the confirmation of an accumulation phase for Ethereum is still pending, there is a potential for its price to decline further relative to Bitcoin. Nonetheless, if history serves as a guide, an accumulation phase may be on the horizon, offering a promising opportunity for Ethereum investors.
Investment Disclaimer: The content provided in this article is for informational and educational purposes only. It should not be considered as financial advice. It is advisable to consult a financial advisor before making any investment decisions. Trading and investing carry a substantial level of financial risk, and past performance may not be indicative of future results. No content in this article constitutes a recommendation or solicitation to buy or sell securities or cryptocurrencies.
