A Huge Win for Crypto

Grayscale's shout of triumph

Sep 01, 2023

The 27th Edition analyzes Grayscale’s lawsuit victory and its implication in unlocking growth in the crypto industry, plus other actionable alphas.

The chances of the SEC approving spot Bitcoin ETFs this year have risen from 65% to 75%, following Grayscale’s court win. - Eric Balchunas

On the 29th of August, the United States Court of Appeal ruled in favor of Grayscale, vacating SEC’s denial of $GBTC’s conversion into an ETF.

For clarity, this court ruling does not automatically grant Grayscale permission to convert $GBTC into ETF; it only improves their odds of getting that privilege.

The SEC has been hostile regarding bitcoin ETFs for decades, and this hostility has even gone beyond ETFs to centralize exchanges like Binance and Coinbase. That’s why the court’s ruling was hugely celebrated across various crypto communities as if it were the approval itself.

The Commission’s unexplained discounting of the obvious financial and mathematical relationship between the spot and futures markets falls short of the standard for reasoned decisionmaking. - Rio

But here’s the thing: The court’s ruling was picked up by various big media outlets like CNN, New York Times, and Wall Street Journal, to mention a few, which all get huge readerships. That said, all eyes and pressures are now on the SEC to review the various spot Bitcoin ETF applications with fairness and sound judgment.

If you’d recall, BlackRock, WisdomTree, Fidelity, and other Tradfi giants initially (re)filed for Bitcoin spot EFTs, of which their deadlines are fast approaching. Once the SEC approves one, it’ll likely approve the others. Which will be a big deal for the crypto industry.

The above chart explains the market price movements when the first gold spot ETF, the SPDR Gold Trust ETF (GLD), was listed on the NYSE in November 2004. That single listing revolutionalized the entire gold market. The same wave might happen in Crypto once all prominent Bitcoin spot ETF filings are approved.

Get an umbrella, anon. The storm is coming.

Chart of the Week

Base chain is experiencing meteoric growth in TVL and fees lately. Most can be attributed to Aerodrome and Friend Tech’s impressive performances. And with how dapps are deploying on Base chain, it’s only a matter of time before they start competing with the prominent ones.