An Appealing Case for a Rally
SEC Deadline Looms
Back in August, a court sided with Grayscale, accusing the SEC of acting in an “arbitrary and capricious manner” when it denied their spot Bitcoin ETF application. Since then, the SEC's options have narrowed to the following:
- Appeal the court's decision within a 45-day window.
- Develop a new rationale for rejecting spot Bitcoin ETFs.
- Consider revoking existing approvals for futures-based ETFs as justification for denying spot ETFs.
- Conform to the judicial ruling by approving the spot Bitcoin ETFs, thereby avoiding further legal issues.
As tomorrow marks the end of the SEC's appeal window, the regulatory landscape is on the cusp of significant change. Should the SEC forgo an appeal, the court is expected to outline the subsequent steps, potentially instructing the SEC to greenlight Grayscale's application.
Market Implications
The Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE) have seen their discounts to Net Asset Value (NAV) narrow. Despite this trend, both trusts still trade at a significant discount to their respective NAVs, a situation we still view as offering an enticing risk/reward profile for investors.
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