The ongoing history between the SEC and Grayscale might reach an end after all this time. The company applied for approval precisely two years ago, during which the SEC has only delayed any update. Unfortunately, Grayscale is not the only business in this situation because the SEC ignored numerous applications of BTC ETFs as they considered these assets dangerous for investors. Although they’re pretty demanded and waited for, ETFs might indeed experience low trading volumes, like the case of Ethereum ETFs.
However, BTC ETFs created such a fuss on the internet that the price of Bitcoin had considerably spiked in the past months due to the positive investor sentiment index, which indicates greed as it jumped to 70.06 this November, so learning how to buy Bitcoin is best now.
Investors are hopeful about Bitcoin’s course in the ETF journey, but they must be patient and
wait for the SEC’s final decision on Grayscale, with which they’ve had beef for some time. Here, we’ll briefly explain the timescale of the entire situation.
Table of Contents
What’s the deal between the SEC and Grayscale?
Grayscale is a digital currency company founded in 2013 that launched a Bitcoin trust the same year. In 2022, it launched an ETF, but the SEC decided to deny the trust since it was concerned about price fixing and the lack of cryptocurrency stability. Therefore, Grayscale sued the SEC, and now the process might come to an end.
Grayscale indeed handles the largest Bitcoin fund in the world, but this didn’t stop the SEC from rejecting the application since they argued the businesses’ managers didn’t provide a thorough analysis of market manipulation concerns. On the other hand, Grayscale believes the SEC is only a conflicting institution whose previous actions make no sense—the SEC approved other BTC ETFs that weren’t as security-backed before.
Investors are hoping the SEC will approve Grayscale’s ETF project
Although the SEC is concerned about this new digital asset’s repercussions, most investors are eager for it to get approved because it’s one of the most awaited. ETFs are considered beneficial for expanding an investor’s view on financial possibilities, and they come as highly liquid for their low expenses.
At the same time, users are more included in investing in spot bitcoin ETFs rather than futures-based ones, which made the subject of the SEC’s approval. Futures can be riskier since traders must abide by the contract’s predetermined date and price, which can change considerably. Still, users will conduct transactions at the current market price in spot trading.
At the same time, spot ETFs ensure ownership of Bitcoin, while futures don’t. Indeed, BTC futures might provide more chances of making profits and less capital requirement. However, we should not get over the underlying risk of investing in futures.
The differences between spot and futures trading
Besides the elements discussed above, some key differences between the two assets provide a better understanding of why they’re so awaited. For instance:
- Futures markets ensure more leverage, so they’re capital-efficient through a BTC futures position. However, spot trading is not that offering;
- Spot BTC ensures profit only if prices increase, but only during bullish markets. Futures are highly profitable in any type of market but only based on short-term price movements;
- Futures have better liquidity, so investors can better manage their investments compared to spot trading, which is less financially leveraging;
However, what’s best at spot trading is the low-risk investors take for their assets and projects, which is also easier to understand. On the other hand, futures are considerably complex and high-risk. Therefore, any investor should start with spot BTC ETFs because they’re safer in the long term. What’s sure is that both assets are precious for the crypto market.
The first approval window for BTC ETFs is close
Since the SEC is currently going through difficulties in meeting Grayscale’s requirements and fulfilling approvals, the momentary decision includes providing an eight-day window for the SEC to decide on the total 12 spot BTC ETFs. Hence, it could be possible that the company might approve them all in one sitting, or at least that’s what investors hope for.
The window is due to the deadline extension of the SEC in order to analyze some pending ETF fillings properly. On the other hand, experts believe that even if the SEC makes a step forward, only about nine of the 12 spot ETFs might get approved somewhere until the 10th of January next year.
Meanwhile, Grayscale waits for the decision on the GBTC conversion
Grayscale continues the communication war with the SEC since the company is waiting for approval over converting the GBTC trust into a spot BTC ETF. Grayscale is optimistic about the approval since more BTC ETFs receive the green light to the crypto market.
At the same time, the increasing price of Bitcoin makes investors positive about a good outcome. But Bitcoin is not the only one that has experienced a price boom. Solana, Ripple and even Ethereum had similar experiences due to a kick start of the upcoming bull market. Despite the fact that these blockchains were booming already due to their updates, the truth is that all the curiosity about the final decision of the SEC is driving the market to considerable heights.
This might be due to a significant demand for spot ETFs that promise better stability and liquidity, which are essential for any regular investor. At the same time, ETFs are great for portfolio diversification because they add a valuable asset that can ensure significant profits in the long run. Moreover, ETFs open the gates to numerous future opportunities and possibilities for investors to discover other investments and achieve total stability.
Final considerations
Grayscale and the SEC have been “fighting” for common ground for almost two years, and it seems like they’re getting closer. Grayscale wants to transform one of its trusts into a BTC ETF, but the SEC sees them as highly risky and without a safety base for investors. From this incident, investors are more eager by the day for the SEC to approve this asset.
