Bitcoin spot ETF? Experts say SEC has “very little wiggle room”

• ETF analyst Eric Balchunas and James Seyffart say the odds of a Bitcoin spot ETF approval this year are 75%.
• The Bloomberg ETF analysts say the SEC has “very little wiggle room” and that denying spot ETFs further would be “politically untenable”.
• The SEC has suffered both legal and PR loss after Grayscale’s win.

The US Securities and Exchange Commission (SEC) has “very little wiggle room” now and will soon have to approve the first Bitcoin spot ETF for the US market.

That’s Bloomberg ETF analysts Eric Balchunas and James Seyffart’s take after yesterday’s court decision that granted a review petition filed by Grayscale Investments. The odds are up from 65%.

Experts say odds of spot ETF have increased

Balchunas shared his and Seyffart’s prediction of when the SEC could approve the ETF, noting a 75% probability it happens in 2023 and 95% by the end of next year. Noting that the SEC’s loss in the Grayscale lawsuit had increased odds of a spot ETF finally being approved, the senior ETF analyst said via a post on X:

NEW: @JSeyff & I are upping our odds to 75% of spot bitcoin ETFs launching this yr (95% by end of '24). While we factored Grayscale win into our prev 65% odds, the unanimity & decisiveness of ruling was beyond expectations and leaves SEC w "very little wiggle room" via @NYCStein pic.twitter.com/IyEGmWjuHa

— Eric Balchunas (@EricBalchunas) August 30, 2023

According to the ETF experts, the SEC has suffered a double loss that leaves further denials “politically untenable.” Other than the legal blow that comes with Grayscale’s win, the US regulator is looking at a PR loss that has a far greater impact in terms of setting narratives and changing minds. Mainstream’s coverage of the story and what it implies doesn’t help the agency, Balchunas noted.

“We think the legal and PR loss will combine to make denial politically untenable,” Balchunas wrote.

While the SEC could delay upcoming ETF decisions – or even deny them – the analysts say the regulator will find it difficult to deny the one by crypto asset management firm Hashdex.

Even if SEC wants to deny all of these applications. We think they would have a very hard time finding a way to deny @hashdex's unique and novel approach for spot Bitcoin exposure in $DEFI. Worries about spot manipulation & settlement should be assuaged. Increasing '24 odds pic.twitter.com/b1HHbbHeEq

— James Seyffart (@JSeyff) August 30, 2023

The SEC recently delayed a decision on the Ark 21Shares Bitcoin ETF proposal, while soft deadlines for several filings including for BlackRock, Fidelity and others are coming up.