There are thousands of digital tokens, but only one of them has been a topic of discussion at the upper echelons of the U.S. court system lately. Hence, while September might not be the exact month when Bitcoin (BTC -2.33%) gains widespread acceptance and adoption, it could still be the right time to start a long position in anticipation of more victories to come.
I say "more victories," because the crypto-sphere just bore witness to an event that isn't the end of the story but is nonetheless historic. At the very least, it's an encouraging instance of America's system of checks and balances at work, as well as a sign that Bitcoin may have support in some branches of government, if not others.
No small victory
After a rough 2022, this year set Bitcoin back on the comeback trail as the token clawed its way back up from $16,000. Yet, $30,000 has been elusive so far and the prior peak of $69,000 still seems far away.
September could provide Bitcoin's breakthrough moment, however, as the financial markets are forward-looking and investors are likely looking forward to a retirement-account-friendly Bitcoin-based fund. It's astounding to consider that such a fund doesn't exist yet, but the wheels of government often turn slowly regarding new technologies.
Granted, there is the Grayscale Bitcoin Trust (GBTC -1.49%), but that's not the Holy Grail that crypto advocates are looking for. GBTC is based on $16.3 billion in Bitcoin holdings, but it's a mutual fund and not the more fluid exchange-traded fund. It can't reflect the real-time price of Bitcoin on the spot market in the same way that a gold exchange-traded fund (ETF) offers real-time pricing of the spot gold market. A proper Bitcoin ETF would always reflect the true Bitcoin price. GBTC currently trades at a 21% discount to the Bitcoin in its digital coffers.
Of course, Grayscale would gladly convert GBTC to a spot Bitcoin ETF, and the company applied for this in 2021. However, the Securities and Exchange Commission (SEC) rejected the company's application for such an ETF last year.
Grayscale immediately appealed to the U.S. Court of Appeals for District of Columbia Circuit, which recently sided with Grayscale against the SEC. Not only that, but the appeals court declared that the SEC was "arbitrary and capricious" in its rejection of Grayscale's proposed spot Bitcoin ETF and that the regulator failed to provide a "coherent explanation" for its "unlike regulatory treatment of like products."
Paving the way for giants to step in
The appeals court's ruling prompted a quick Bitcoin rally of around 7%, but it's certainly not too late to position yourself for the next leg up. After all, Bitcoin is still nowhere near its previous pinnacle, and there may be more milestone moments ahead.
After all, Grayscale isn't the only protagonist in this story. Much bigger financial firms, notably including Blackrock and Fidelity, have also applied for spot Bitcoin ETFs. Just the thought of these firms eventually garnering approval for bona fide Bitcoin ETFs should stir up enough excitement to spur buying activity in Bitcoin itself over the coming months.
Already, there's talk that one or more approved spot Bitcoin ETFs is an inevitability. Representative of this opinion is CoinRoutes CEO Dave Weisberger, who declared that the appeals court's decision "virtually guarantees [the SEC] will approve BlackRock and Fidelity." Weisberger even added that "Grayscale may need to refile, but they will almost certainly be approved as well."
Yet, investors needn't require virtual guarantees or near certainty to take a bullish stance on Bitcoin in September and for the remainder of the year. In an efficient market, traders large and small will position themselves for what they think is coming, not what's happening now. Hence, the mere anticipation of the seemingly inevitable Holy Grail ought to be sufficient to drive buying activity in 2023's second half and beyond -- and traders who wait for the "confirmation" of more milestones could end up playing catch-up at significantly higher price points.
