The Cryptocurrency circle, which is characterized by violent fluctuations and endless challenges, is now betting on whether the Cryptocurrency ETF applied by BlackRock, the world's largest asset management company, can be approved.Some analysts believe that although the U
The Cryptocurrency circle, which is characterized by violent fluctuations and endless challenges, is now betting on whether the Cryptocurrency ETF applied by BlackRock, the world's largest asset management company, can be approved.
Some analysts believe that although the U.S. Securities and Exchange Commission (SEC) approval does not disclose details to the market, if this ETF is approved, it is expected to significantly boost the Cryptocurrency market.
This ETF applied by BlackRock is the spot ETF of Bitcoin. So far, the SEC has not approved the spot ETF of Bitcoin, and the Bitcoin ETFs previously approved by the SEC are all futures ETFs of Bitcoin.
On Wednesday, June 21st, during the US trading session, Bitcoin surged nearly 8%, breaking the $30000 mark and reaching a new high since the end of April this year. However, compared to its peak in 2021, Bitcoin has fallen by about 60%.
The market believes that the recent rise of Bitcoin is related to the spot ETF application submitted by BlackRock and other institutions.
Vijay Ayyar, head of international markets at CoinDCX, India's largest Cryptocurrency exchange, said:
A series of BTC spot ETF application announcements issued by large institutions undoubtedly restored the bullish sentiment in the Cryptocurrency market.
From a technical perspective, Bitcoin has broken the downward trend that has been ongoing for two months since April this year, so most traders would expect Bitcoin to test at least the $32000 pressure line. If we break through this level, Bitcoin will rise by $36000, and there is a possibility of exceeding $45000 to $48000 thereafter.
Why is BlackRock's spot Bitcoin ETF expected to be approved?
It's not easy to change the SEC's mindset, but there are reasons to believe it's possible.
At first glance, BlackRock's application is roughly similar to other previous proposals, creating an ETF that owns and trades Bitcoin. The application of these Bitcoin ETFs is generally similar to the operation of physical commodity ETFs such as gold. But at least one important point of BlackRock's application is worth noting - according to a regulatory document, BlackRock also submitted an agreement that will share the "supervision right" of the spot bitcoin trading platform with NASDAQ. In other words, exchanges and regulatory agencies can obtain confidential information about buyers, sellers, and prices.
The potential manipulation of Bitcoin spot prices is an important reason why the SEC has so far rejected Bitcoin spot ETF applications. In order to avoid this problem, BlackRock chooses Coinbase as the monitoring and sharing platform, which may be very important, because Coinbase is one of the exchanges that inform Cishang Stock Exchange of its reference price for Bitcoin, and BlackRock ETF will use this reference price.
Almost all the applicants of Almost all spot ETF believe that the Spot market of Bitcoin has the possibility of being supervised by the Chicago merchants. However, the SEC believes that even if the spot price of Bitcoin is closely related to the price of the futures market, the institution does not have enough evidence to indicate that attempts to manipulate the Spot market transactions can be detected in the futures market.
The U.S. Court of Appeals for the District of Columbia Circuit may be considering whether the SEC's argument is convincing. Now, the case has reached an impasse, which may also signal to companies such as BlackRock that the situation may be reversed.
If the SEC approves BlackRock's spot ETF for Bitcoin, the agency will not have reason to reject other spot ETF applications.
If BlackRock's application is approved, who will be the direct beneficiary?
If BlackRock's Bitcoin spot ETF is approved, the most direct beneficiary is the holder of the Grey Bitcoin Trust (GBTC), because the discount of GBTC may end, even higher than the spot price of Bitcoin.
Since the beginning of this year, the discount between the trading price of GBTC and the value of its Bitcoin holdings has been increasing, with an average discount of about 40% this year.
Since BlackRock submitted its application, the discount of GBTC has narrowed, from about 44% in the middle of last week to about 34% on this Tuesday. During the same period, the daily trading volume of GBTC has soared from $16.1 million to $80 million, an increase of about 400%. This shows that investors are fully expecting the spot ETF applied by BlackRock.
Many institutions may follow BlackRock to make similar applications. Later last week, Bitwise Asset Management, which had previously applied for Bitcoin spot ETFs, sought new permission to list Bitcoin spot ETFs.
Another beneficiary may be Coinbase - as the custodian of ETFs applied by BlackRock and the custodian of Bitcoin of GBTC, the company is expected to obtain a more stable source of income than the fees based on transaction volume, and Coinbase's institutional business is also expected to become the center of Market maker trading around spot ETFs of Bitcoin.
Recently, the SEC filed a lawsuit against Coinbase and Coinbase, which are two giants in the global Cryptocurrency trading market, accounting for half of the market share. The SEC's lawsuit against these two exchanges is considered the strictest regulatory action ever taken against the crypto market. However, if BlackRock's Bitcoin spot ETF is approved, it may ease the pressures faced by Coinbase.
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