Bitcoin, other cryptocurrency prices and related stocks soared Tuesday after a U.S. court sided with Grayscale Investments against the Securities and Exchange Commission in Grayscale's application for a bitcoin exchange-traded fund.
On Tuesday, the U.S. District of Columbia Court of Appeals ruled the SEC must review its previous decision to reject Grayscale's bitcoin ETF application.
Crypto fund manager Grayscale Investments applied for its Grayscale Bitcoin Trust to be converted into an ETF in October 2021. The SEC rejected the application in June 2022, saying it failed to answer the regulators questions about preventing market manipulation, among other concerns.
The decision marks another step closer for the U.S. getting its first spot price bitcoin ETF, which would allow investors to gain exposure to bitcoin on traditional markets without having to directly own the cryptocurrency.
"This is great news for Grayscale, of course, but also for the entire crypto community - and investors worldwide," Ric Edelman, founder of the Digital Assets Council of Financial Professionals told Investor's Business Daily. "Assuming the SEC does not appeal, it is likely to result in the quick approval of not only Grayscale's spot bitcoin ETF application, but many of the other nine applications pending before the SEC as well."
Asset management behemoth BlackRock partnered with crypto exchange Coinbase on a bitcoin ETF application in June. Invesco, WisdomTree and Cathie Wood's ARK Invest firm have also applied for BTC ETFs.
Edelman noted that three-quarters of financial advisors say they won't allocate to bitcoin until a spot bitcoin ETF is available. But once available, "it's reasonable to expect significant inflows - and with a fixed supply, that would lead to material increases in bitcoin's price."
Analysts widely expect SEC acceptance to result in approval for several spot bitcoin ETF applications. "It's the most bullish event in crypto in years," Edelman said.
Bitcoin Price Action
Bitcoin price rallied near $27,900 Tuesday after the court decision and briefly eclipsed $28,100. The world's largest crypto traded near two-month lows around $26,000 prior to the announcement.
Coinbase stock bolted nearly 15% on Tuesday. Bitcoin miner Marathon Digital soared about 29% while Riot Platforms and Hut 8 Mining each jumped roughly 17%.
GBTC stock spiked 17.4% on Tuesday's news. ProShares Bitcoin Strategy ETF, which is a bitcoin-linked ETF, surged 7.3%.
The world's second-largest crypto, ethereum, climbed to $1,740 by the afternoon from its $1,640 level early Tuesday.
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