Renewed Expectations for Bitcoin Spot ETF Launch... Will the Market Revive?

SEC Halts Rejection of Bitcoin Spot ETF
Coin Prices Rise as Launch Probability Increases... Domestic Industry Optimistic

Image source=Reuters·Yonhap News

Expectations are growing in the United States for the launch of a Bitcoin spot exchange-traded fund (ETF). The domestic industry also views this as a positive development that could improve the challenging market conditions.

According to industry sources, the U.S. Court of Appeals for the District of Columbia Circuit has ruled that the Securities and Exchange Commission (SEC) must reconsider the listing of the Bitcoin spot ETF application submitted by asset management firm Grayscale Investments.

Previously, Bitcoin futures ETFs such as the ProShares Bitcoin Strategy ETF (BITO) received SEC approval and are currently traded in the market. However, the SEC has consistently rejected approvals for Bitcoin spot ETFs. Grayscale filed an application in 2021 to convert its Bitcoin fund (GBTC) into an ETF, but after the SEC rejected it, the company filed a lawsuit. Additionally, BlackRock, the world's largest asset manager, reapplied after its Bitcoin spot ETF application was denied. Several other asset management firms, including Ark Investment, have also submitted applications.

Judge Neomi Rao, who issued the ruling, emphasized that the SEC’s approval of Bitcoin futures ETFs while rejecting spot ETFs was "arbitrary and capricious" in denying Grayscale’s application.

As the possibility of a Bitcoin spot ETF listing increases, prices of Bitcoin and other virtual assets have risen. This is due to expectations that virtual assets will be incorporated into the regulatory framework and that a large purchase of Bitcoin will be necessary to manage the product once listed, which is seen as a positive factor. According to the global virtual asset market tracking site CoinMarketCap, as of 3:33 PM on the 30th, the price of Bitcoin was $27,458 (approximately 36.34 million KRW), up 5.39% from the previous day. Ethereum also rose more than 4%, with most of the top market capitalization virtual assets showing upward trends.

Furthermore, there is speculation that if the SEC approves an Ethereum futures ETF, it will also act as a positive catalyst for the market. Although the SEC has previously rejected Ethereum futures ETF approvals, it has been predicted that such an ETF might be listed before a Bitcoin spot ETF. If the SEC approves an Ethereum futures ETF, the product from the U.S. fund manager Volatility Shares is expected to be the first to launch.

With the increasing likelihood of virtual asset-related ETF launches, expectations are also rising in the domestic market. Although no virtual asset-related ETFs have been launched or traded domestically, it is anticipated that trading activity will increase following price rises in coins. This is expected to serve as a positive factor that could partially offset poor earnings. For example, Dunamu, which operates the virtual asset exchange Upbit, reported an operating profit of 86.6 billion KRW on a consolidated basis in Q2 this year, a 68.9% decrease compared to the same period last year. Bithumb recorded an operating loss of 3.44 billion KRW.

An industry official stated, "Since virtual asset prices are linked globally, price increases on overseas exchanges will likely lead to upward trends domestically as well," adding, "If various virtual asset-related products are introduced domestically, it could have a positive effect in terms of business diversification."