Grayscale vs. SEC: How Has It Impacted The Price Of Bitcoin?

Bitcoin has been pumping with other cryptocurrencies following suit.

In the last 24 hours (31st August 2023), BTC has spiked from around 25k to over 27k, about an 8% increase in value.

The question is: What is responsible for this sudden rise?

Can it be traced to Grayscale winning the SEC in court on Tuesday, 29th August 2023?

Let’s look at the legal battle between Grayscale and the SEC and the impact on the price of BTC.

First Things First: Who Is Grayscale?

Grayscale is a leading player in the digital asset management industry. It offers a variety of investment products for institutional and individual investors.

Also, Grayscale is regulated, making it a safe choice for investors.

This company stands out because its products expose investors to the cryptocurrency market.

Its flagship product is the Grayscale Bitcoin Trust (GBTC), the world’s most significant Bitcoin investment vehicle.?

Grayscale also offers several other digital asset trusts, including Ethereum, Litecoin, and Chainlink trusts.

Sometime last year, Grayscale decided to convert its GBTC to an ETF, so it applied to the SEC.

This decision could be based on two reasons:

1. Converting GBTC into an ETF would make it easier for investors to buy and sell Bitcoin because ETFs are more liquid, incur less fees, and are accessible to all investors when compared to trusts.

2. It will reduce the discount between GBTC shares and the underlying Bitcoin price, thus allowing the company to make more profit.

However, the SEC didn’t approve Grayscale’s application, arguing that the proposal did not meet its standards for investor protection.

Fast forward to the present day…

On 29th August 2023, the United States Court of Appeal for the District of Columbia Circuit ruled on the Grayscale vs. SEC case.

It ruled that the SEC’s decision to reject Grayscale’s application to convert its GBTC into a spot Bitcoin ETF was “arbitrary and capricious.”?

In other words, the SEC is to review the proposal again and possibly approve it.

The appeal court found that the SEC had not adequately explained its reasoning for the rejection, and that it had discriminated against spot Bitcoin ETFs compared to Bitcoin futures ETFs.

This is a major victory for Grayscale and for the broader cryptocurrency industry, as it could pave the way for the approval of the first spot Bitcoin ETF in the United States.

If that happens, it will be easier for investors to gain exposure to Bitcoin.?

Now, how did this news impact Bitcoin price?

Let’s find out below.

What Is The Impact Of The News On Bitcoin Price?

The ruling had a positive impact on the price of Bitcoin.

In the hours following the ruling, the price of Bitcoin rose by more than 7%.

This is likely due to the fact that the ruling increases the likelihood of a spot Bitcoin ETF being approved in the United States.

A spot Bitcoin ETF would make it easier for investors to buy and sell Bitcoin, which could lead to increased demand.

But this is not the only news that is pumping Bitcoin’s value.?

According to research firm Cryptonary, here are five other reasons why BTC may continue to rise:

1. In Argentina, a pro-BTC candidate is leading the polls. If he wins, it will lead to a widespread adoption and millions onboarded to BTC.?

2. BTC’s hash-rate has hit a new all-time high. This shows that mining is more decentralized and as such Bitcoin is more resilient to government interference.?

3. Institutions are still bullish about Bitcoin with top players like JPMorgan stating there’s only “limited downside” in BTC.?

4. Ledn, a firm in the Cayman Islands now helps people access mortgages using Bitcoin as collateral. This means less selling pressure on Bitcoin and potentially more demand as more people use it to purchase real estate.

5. On the technical front, Bitcoin’s RSI is under 30 in the past few days which indicates enough sell pressure. And Bitcoin is expected to continue grinding back up to recovery from here.

So the future looks bright for Bitcoin and this may be a good time to accumulate BTC.

But remember to do due diligence before you buy.?

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See you in the group and in my next post.