The unfolding situation with the bitcoin spot ETF has reached a critical point, with open letters from Congress ramping up pressure on the SEC and recent developments from BlackRock
BLK
 indicating positive news is on the horizon.

Bloomberg’s Senior ETF Analyst, Eric Balchunas, has gone on record stating, “The fact that SEC is actively engaging with spot bitcoin issuers on their current applications — which hasn’t ever happened before — we think a rejection is unlikely and hold a 75% chance of approval by the end of this year.”

This is noteworthy because, for the first time, the SEC is actively engaging with applicants.

Further bolstering the view of imminent approval is Steven Schoenfeld, a former executive at BlackRock, who estimated in a panel discussion that the SEC would approve spot bitcoin
BTC
 ETFs in the next “three to six months.” This timeline falls between January and April 2024, nearly aligning with Balchunas’s predictions. Schoenfeld also noted that the SEC would likely approve multiple filings simultaneously to prevent any single applicant from gaining a first-mover advantage.

Adding another layer of optimism is the recent legal win by Grayscale over its lawsuit against the SEC. The lawsuit centred around Grayscale’s request to convert its bitcoin Trust into an ETF. The court’s decision to compel the SEC to fairly consider this conversion raises hopes for other pending ETF applications.

The contraction of the Grayscale Bitcoin Trust discount this week also serves as a prelude to the October 13 deadline for the SEC’s next move, which is likely to involve an appeal in the Grayscale lawsuit.

Adding to the growing optimism, the potential approval of a bitcoin spot ETF could act as a catalyst for a wave of institutional investment. Estimates suggest that up to $17.7 trillion of institutional money could flow into Bitcoin ETF products. This would dwarf existing futures ETF volumes and mark a critical point in the broader acceptance of digital assets.

Provided the SEC’s anticipated sweeping approval becomes a reality, the impact of this could be significant. It could not only redefine investment dynamics but also spur intense competition among ETF providers like Fidelity, SkyBridge, and Valkyrie.

While the waiting continues, the recent positive indicators suggest that the approval of bitcoin spot ETFs is not a matter of ‘if,’ but ‘when,’ with a highly optimistic outlook for the first quarter of 2024. Just in time for the halving.

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