A groundbreaking development emerged from the U.S. legal landscape as a federal appeals court ordered the U.S. Securities and Exchange Commission (SEC) to “vacate” its prior rejection of Grayscale’s bold bid to transform its Bitcoin Trust into an Exchange-Traded Fund (ETF). The ramifications of this ruling have ignited a chain of events that have set both Bitcoin and the crypto market at large into a fervent motion.
Within the span of just an hour, Bitcoin demonstrated its agility by surging 5%, crossing the $27,000 mark. This impressive leap was catalyzed by the court’s decision mandating the SEC to reevaluate its stance on Grayscale Investments’ proposal to convert the Grayscale Bitcoin Trust (GBTC) into an ETF. The impact of this ruling was palpable as Grayscale Bitcoin Trust’s value saw a remarkable 17% increase, narrowing the discount to its net asset value from 25% to 17%. Traders are now actively positioning themselves, anticipating the possibility of an ETF conversion that could entirely obliterate the prevailing discount.
This legal triumph unfurls a gateway of potentialities for the U.S., potentially welcoming the advent of a Bitcoin spot ETF. Enthusiasts have long advocated for such a financial instrument, foreseeing the ability to draw a wider cross-section of the public into Bitcoin investment. This strategic move would circumvent the complexities of direct crypto acquisition and mitigate concerns related to custody provider vulnerabilities.
Circuit Judge Neomi Rao’s eloquent words resound through the corridors of financial interpretation: “Federal agencies are required to ‘treat like cases alike.'” In a clear vindication of Grayscale’s stance, Rao noted that while the SEC recently greenlit the trading of two Bitcoin futures funds on national exchanges, it had concurrently denied approval for Grayscale’s Bitcoin fund. This apparent incongruity prompted the court’s verdict in favor of Grayscale, acknowledging the comparability of its proposed Bitcoin exchange-traded product to the Bitcoin futures exchange-traded counterparts.
In the aftermath of this seismic legal victory, the crypto sector resonated with enthusiasm. Notably, Coinbase surged by a staggering 13%, while MicroStrategy experienced a 9% upswing. Miners, a segment that has seen its share of turbulence, reveled in substantial gains, with Marathon Digital rising by an impressive 24%, and Riot Platforms and Hut 8 Mining enjoying 16% surges each.
Altcoins too found themselves basking in the market upswing, as Ethereum (ETH), Cardano (ADA), Dogecoin (DOGE), and Solana (SOL) all surged by approximately 5%. The unfolding story also saw a significant liquidation of short positions, with an astounding $87 million worth of shorts being liquidated in the past 24 hours, $76 million of which transpired within an hour of the news breaking.
Ji Kim, General Counsel and Head of Global Policy for the Crypto Council for Innovation, aptly summarized the unfolding narrative: “Bitcoin’s immediate price surge post-ruling underlines the market’s anticipation and the profound impact such a decision holds.” The imminent prospect of spot Bitcoin ETFs inching closer to realization has ignited a surge of investor confidence, painting a vibrant portrait of the market’s reaction to this pivotal court decision.