The market outlook for Bitcoin is starting to get complex after Grayscale won a very important battle against the SEC in court.
Following the Court of Appeals ruling that forced the federal agency to reconsider turning the Grayscale Bitcoin Trust (GBTC) into a publicly tradable ETF, we have seen a significant shift in the digital investment world.
The odds of an approval for the first spot ETF of Bitcoin in the United States are getting higher and higher, and price speculation is starting to get hot.
Let’s take a look at all the details together.
Grayscale’s victory against the SEC in court: a positive boost for Bitcoin and the digital asset market
The major milestone achieved by Grayscale’s court victory against the SEC has spurred capital inflows into regulated products that offer exposure to Bitcoin and other digital assets.
Although the month of August, which has historically been unattractive for investors, saw significant outflows into the digital asset sector, after the latest news the trend is beginning to reverse.
In fact, until 25 August, total assets under management (AUM) from funds trading ETCs and OTCs related to Bitcoin and other cryptocurrencies declined 12.7% from July to reach a total value of $29.7 billion, which represents the lowest average value on record since February 2023.
Average daily trading volumes also followed the downward momentum, marking a 17.9% decline in August to $208 million, which represents the lowest average value on record since January 2023
The situation for Bitcoin and the digital asset sector changed just after Judge Noemi Rao ruled in favor of Grayscale forcing the SEC to renegotiate with Michael Sonnenshein and his team.
Between 29 and 30 August, Grayscale’s GBTC saw a 7.20% increase in assets under management, translating into an inflow of $1.17 billion, for a total trust value of $17.4 billion.
In terms of pricing, Bitcoin was not the only one pumping, with positive responses for MVDA and COIN as well. Usually both the Digital asset index and Coinbase’s action follow somewhat in Bitcoin’s footsteps but move more strongly in conjunction with these watershed events in the regulatory arena.
Also very interesting to note is that compared to the beginning of the year there has been a strong rebound in assets under management by funds offering exposure to BTC such as ProShares, Purpose Invest, and Ci Financial.
In detail ProShares marked an increase of 83.8% since the beginning of the year, Purpose Invest by 79% and Ci Financial by 183%.
Such marked responses from investors reviving a sector that has been somewhat neglected in recent months can only bode well for the market’s fortunes in the coming months.
Spot ETFs on the way?
The voice of the bulls is back in the news after Grayscale’s victory against the SEC in the matter concerning the transformation of the Bitcoin Trust (GBTC) a freely tradable ETF with a spot underlying.
Although the federal agency had previously expressed its concerns about a financial product lacking hedges against fraudulent and manipulative activity, now the US Court of Appeals appears to have forced Gary Gensler to reconsider Sonnenshein’s bid.
In fact, by calling the SEC’s behavior “arbitrary and capricious,” Judge Noemi Rao has given this matter a very strong shakeup, hinting that the road to a spot ETF approval may be very close.
If a spot underlying product were to be finally approved for Bitcoin, this would unquestionably bring an influx of substantial capital from the pockets of “traditional” investors operating in regulated markets.
Bitcoin and the rest of the crypto sector market would no longer fall into a niche environment of regulatory uncertainties and few guarantees for the end investor.
An ETF would open the door to a new era of greater awareness of the importance of digital gold, and with investment solutions that would have a more direct impact on the price of the asset.
In fact, in order to run a spot ETF, a fund such as Grayscale would have to have an amount of BTC (not derivative products) in reserve as collateral: an increase in volumes by brokers would translate directly into a reduction in the supply of Bitcoin in the market, giving a strong hand to the bulls.
Hence, it is clear that we are close to an event that will determine the fate of the crypto market in the coming months: an approval by the SEC would take us directly near a bull market while a rejection would send us back into a danger zone with new declines on the horizon.
We will now have to wait probably a few more weeks, but the odds are in favor of an approval by the SEC, which would have to find other excuses to be able to reject the proposal of Grayscale or other private funds for the umpteenth time.
Should an ETF in Grayscale then be approved, the federal agency would be forced to chain approval of numerous other proposals from a variety of funds such as Fidelity, BlackRock, Pro Shares, etc.
Bitcoin price analysis after Grayscale’s victory against the SEC in court
Bitcoin reacted fully optimistic following the announcement of Grayscale’s victory in court against the SEC.
Prices registered a significant +6.11% during the day on 29 August with volumes of more than $2 billion on the cryptocurrency exchange Binance alone.
After a bearish and disinterested August, here comes a strong market response.
BTC’s pump violently broke both the EMA 10 and EMA 50 on 4h time frames, after the asset had been below both averages for several days.
On the RSI front, the indicator has risen very rapidly and approaching the overbought zone, where, however, there is still room for further upward movement.
Right now the price action of the king of cryptocurrencies seems geared to continue with more green candles in the coming days, but there are some important targets to be reached.
Indeed, before one can sing victory there is to conquer the $29,000 level and then the $30,000 level, closing at least one daily candle above it to avoid feints.
Once we have elegantly maintained the $30,000 level we could talk concretely about bullish hypotheses.
Bitcoin’s price now stands at $27,240, and although the directionality of the short-term trend is blatantly bullish, we do not yet have all the cards in hand to be able to say with certainty that the road is paved.
There are multiple weather and risks of various kinds that could jeopardize BTC’s price structure.
Hence, there is no need to get caught up in FOMO and euphoria: waiting for confirmation in such a delicate context seems to be the wisest move at the moment to avoid getting burned.