Grayscale’s Lawsuit Victory and the Impact on the Crypto Market
Last week, Grayscale won its lawsuit against the SEC’s refusal to approve spot bitcoin ETF, which could have a significant impact on the crypto market in both the short and long term.
Approval of Bitcoin ETFs following Grayscale’s Victory
- The SEC may be forced to approve spot bitcoin ETFs, as the court ruling ordered them to proceed with approval if requirements and laws are met.
- Spot bitcoin ETFs have already been approved in other countries, such as Canada.
- JPMorgan analysts believe the SEC will approve multiple applications simultaneously to avoid first-mover advantages.
The Inflow of Capital: Arrival of Bitcoin ETFs after Grayscale’s Victory
- Spot bitcoin ETFs require the physical delivery of BTC, which means buying BTC on the market to immobilize.
- The capital inflow into spot bitcoin ETFs could be estimated at $2 billion, potentially withdrawing up to 77,000 bitcoins from the market.
- This influx of capital could reduce the supply of BTC on the market and potentially increase the price.
The Shortage of Supply
- The amount of BTC on exchanges is at its lowest level, and exchange volumes are low.
- A significant inflow of capital could increase demand and put pressure on prices.
- Timing is uncertain, and the $2 billion inflow may not come all at once once the ETFs are approved.
The Halving of Bitcoin and Potential for a Bull Run
- In April 2024, there will be the fourth halving of Bitcoin, which is expected to reduce the supply of BTC on the market.
- If the ETFs are approved by February or March 2024, they could attract $2 billion of inflows around the same time as the halving.
- Historically, a bull run has followed previous halvings, suggesting a potential bull run in 2024.
- However, it is unknown if the market value of bitcoin will have remained stable or fallen during that time.
Hot Take
Grayscale’s victory in the lawsuit against the SEC could lead to the approval of spot bitcoin ETFs, resulting in a significant inflow of capital that may reduce the supply of BTC and potentially increase prices. The timing aligns with the upcoming halving of Bitcoin, which historically has been followed by bull runs. While the future is uncertain, this combination of events could trigger a new bull run in 2024, but the market value of bitcoin during that time remains unknown.
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