Client demand for cryptocurrency is on the rise, as highlighted by Larry Fink, CEO of BlackRock Inc (NYSE:BLK). during a Fox Business interview on Wednesday. This comes amid rumors of the SEC's approval of BlackRock's iShares spot Bitcoin ETF, which led Bitcoin's price to surge from $27,900 to $30,000. Despite initial reservations about cryptocurrencies due to potential illicit activities, Fink now sees Bitcoin as a potential game-changer in finance.
The SEC is currently reviewing numerous spot Bitcoin ETF applications from firms like BlackRock, Valkyrie, VanEck, Bitwise, and WisdomTree. Coinbase (NASDAQ:COIN) is listed as the custodian in BlackRock's application. Analysts including Bloomberg's James Seyffart and Eric Balchunas predict a high likelihood of the SEC approving a spot Bitcoin ETF this year following Grayscale's legal victory over the SEC in the US Court of Appeals for the D.C. Circuit concerning its GBTC conversion into a spot Bitcoin ETF.
On the same day, the potential launch of a Bitcoin ETF generated significant interest as it offers a regulated avenue to leverage Bitcoin's price volatility without owning the cryptocurrency. On October 16, 2023, Bitcoin's price briefly crossed the $30,000 threshold due to false rumors that BlackRock's iShares Spot Bitcoin ETF application had been approved by the SEC. These debunked rumors led to a sharp drop in Bitcoin's value to below $29,000—a decrease of around 8%. The SEC issued a stern warning against trusting internet rumors, asserting that accurate SEC information comes directly from the SEC itself.
The SEC has been grappling with managing rising optimism about Bitcoin ETFs and has only managed to delay decisions on numerous applications so far. A pivotal event was when the Court of Appeals sided with Grayscale in its lawsuit against the SEC over its denied application to convert its Grayscale Bitcoin Trust into an ETF. The SEC did not appeal this decision, which could potentially set a precedent for other traditional sector companies like Invesco Ltd. and Franklin Resources (NYSE:BEN), both holding a Zacks Rank #3 (Hold), that are awaiting SEC approval to enter the crypto market. BlackRock is considered a key player in this race.
JPMorgan (NYSE:JPM) analysts led by Nikolaos Panigirtzoglou also predict that the SEC will likely approve a spot Bitcoin ETF soon. Galaxy Digital CEO Mike Novogratz expects this approval by February at the latest, within "four to six months". He collaborated with Invesco to submit an upgraded application to the SEC in June. The court ruled that there is no justification to approve a futures-based Bitcoin ETF while rejecting spot ETFs, implying grave consequences if the SEC were to retroactively withdraw its previous approvals.
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