Let’s briefly review the ins and outs of BTC spot ETF.

[What happened in the past] - [What recent developments] - [What will happen in the future]

【past】

1. Grayscale applied N times to convert its GBTC into a real spot ETF, but was rejected by the SEC.

-Since GBTC cannot be redeemed, its price has always been different from BTC. The current price difference has reached -13%, the highest point in the past 2 years.

-The peak price difference is +40% (the peak of the bull market), and the most desperate price difference has reached -45% (the lowest point in the industry)

-On the contrary, if it becomes an ETF, its price will strictly track the market price of BTC, because it can redeem and adjust positions more smoothly.

2. The SEC has repeatedly rejected applications from Grayscale and other companies for BTC spot ETFs.

-The reasons given by the SEC are usually concerns that BTC and exchanges are susceptible to manipulation, or other vague reasons

-Nonetheless, the SEC did approve several BTC futures ETFs, such as BITO

-Several BTC spot ETFs have also been approved by other countries, such as Canada

-So, there is currently a lack of BTC spot ETFs in the United States.

【recently】

3. Huidu sued the SEC in anger, asking why it only approved futures ETFs and not spot ETFs.

-Result: SEC lost the case

-And the appeal period has just passed

-The decision was handed down by the Court of Appeals for the District of Columbia Circuit, which is generally considered second only to the U.S. Supreme Court

https://www.reuters.com/markets/us/us-sec-does-not-plan-appeal-court-decision-grayscale-bitcoin-etf-source-2023-10-13/

4. What is the difference between spot ETFs and futures ETFs?

-In terms of price fluctuations, the two are very similar. They can accurately track BTC prices and help investors gain BTC exposure.

-From a product level, futures ETF rates are usually higher because they involve more cumbersome futures operations.

- From a psychological perspective, institutional investors are more likely to regard holding spot ETFs as actually holding BTC, but it is just entrusted to ETF managers. And if it allocates futures ETFs, it seems more like short-term speculation. After all, fixed investments in BTC are fixed investments in real BTC. Who would invest in BTC perpetual contracts?

- Therefore, Grayscale believes that after the SEC approved futures ETFs, the SEC’s reason for rejection of “easily manipulated” is not valid.

5. Grayscale resubmitted new materials yesterday to turn its GBTC into a real ETF

-Other applicants, such as the much-talked-about BTC ETF of BlackRock, are new products and will be listed directly, while Grayscale will convert old products into ETFs.

- Grayscale uses the S-3 form instead of the commonly used S-1 form because Grayscale considers its product to be a mature product

https://twitter.com/Grayscale/status/1714988927654994140

【future】

6. SEC loses the case = SEC must give clear reasons, but ≠ SEC will definitely approve BTC spot ETF

-However, futures ETFs have been approved, so it will be difficult to write down the reason for rejection.

-If there is no clear reason, it may lead to the SEC being pressured to approve a BTC spot ETF. Of course, the SEC can also continue to refuse forcefully.

-timeline? Not sure yet

-Will you criticize Grayscale? The negative premium of GBTC climbed to a new high in two years, suggesting that this is a medium probability.

-Will you approve BlackRock? Judging from BlackRock’s past application success rate, this probability is even higher.

7. If the BTC spot ETF is approved, how will the market react?

- Last time CT misrepresented fake news, which brought a 10% increase to BTC. If it is true, the effect should be better.

-Give traditional funds an easier way to allocate BTC without registering a digital currency exchange or downloading a BTC wallet

For Crypto, the industry does not need traditional funds to enter in large quantities, let alone "running into the market." Even if these funds only make a "defensive allocation" of 1% of the position, it will be a very strong positive inflow of funds for the BTC market.

So, everyone is looking forward to that moment.

Author of this article:

0xTodd | Nothing Research Partner