Spot Bitcoin ETF Appears Increasingly Likely, Analysts Say

Fidelity is said to prepare to enter the fray, as Bloomberg boosts approval odds to 70%.

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Reviewed by: Lisa Barr
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Edited by: Ron Day

The likelihood of a spot bitcoin exchange-traded fund has risen to around 70%, according to Bloomberg analysts, a point underscored by mutual fund giant Fidelity Investments reportedly preparing to toss its hat into the ring and that a new crypto fund began trading Tuesday. 

Bloomberg analysts earlier this year said the odds of a spot bitcoin ETF being approved this year were around 40%. That was when Grayscale Investments sued the Securities and Exchange Commission after its request to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF was denied. That suit is expected to be resolved later this year. The SEC has denied dozens of similar efforts over the past decade. 

The likelihood of a spot bitcoin ETF launching this year has been gaining since BlackRock Inc., the world’s largest asset manager and ETF issuer, sought permission June 15 for its own fund and was quickly followed by other issuers.  

According to an exclusive by The Block, the $4.2 trillion asset manager Fidelity Investments may be the next to file for a spot bitcoin ETF, which would directly hold the digital currency. All current bitcoin ETFs instead track the digital asset using derivatives. 

Bloomberg litigation analyst Elliott Z. Stein in a recent report raised the odds of a Grayscale win from 40% after oral arguments. 

“All three judges on the panel appeared to side with Grayscale, based on their lines of questioning,” he wrote.  

If Grayscale wins the case, it would open the floodgates for all the other applications for spot bitcoin ETFs, effectively forcing the hand of the SEC. Bloomberg expects filing decisions to come in August, with ARK Investment Management’s being the first. 

One sign that the SEC may be more permissive about bitcoin ETFs than in the past was its approval of the 2x Bitcoin Strategy ETF (BITX), a leveraged bitcoin futures ETF that began trading Tuesday.  

Another potential sign of a shift in regulatory attitudes toward crypto ETFs was the opening Tuesday of new crypto exchange EDX Markets, which is backed by Citadel Securities, Fidelity and Charles Schwab. The exchange won’t directly hold crypto assets, a difference from exchanges like FTX and Binance that collapsed last year. 

 

Contact Gabe Alpert at [email protected]            

Gabe Alpert is a former data reporter at etf.com with over seven years’ experience in financial journalism. He also previously contributed reporting and analysis to Barron’s Magazine, Investopedia and other publications.