Several major cryptocurrencies jumped on Monday as investors anticipate the first potential approval by the U.S. Securities and Exchange Commission of spot Bitcoin (BTC +0.14%) exchange-traded funds (ETFs) later this week. In particular, the SEC is widely expected to issue a favorable determination for Ark Invest's 21Shares Bitcoin ETF application before Wednesday.
The price of Bitcoin surged 6.7% by the end of the regular trading day, after briefly exceeding the $47,000 milestone for the first time since April 2022. Ethereum (ETH +0.55%) is also up more than 6%, while Marathon Digital (MARA +3.31%) -- a crypto mining firm whose fortunes tend to ebb and flow with the price of Bitcoin -- rose as much as 10.5% this morning before settling to close up 7.7%.
CRYPTO: BTC
Key Data Points
Crypto investors have marked their calendars for Jan. 10
The price of Bitcoin alone has nearly tripled over the past year. But its rally more recently gained steam back in October 2023 after the SEC declined to appeal a federal court's August reversal of an order that had prevented crypto-asset manager Grayscale Investments from converting its popular Grayscale Bitcoin Trust into an ETF. When the D.C. Circuit of Appeals subsequently formalized Grayscale's court win the following week, the onus moved back to the SEC to move forward with its approval processes for several other pending spot ETF applications from providers including BlackRock, Fidelity, and Ark Invest.
Fast-forward to today's rally -- and as I noted back in October -- the first of those deadlines happens to be this Wednesday, Jan. 10. That's specifically the date by which the SEC must approve or deny Ark Invest's open application for its "21Shares" Bitcoin ETF.
This is a big deal for the crypto market as a whole because ETFs would be a much more accessible medium for investors to put their money to work in cryptocurrency assets, at least compared to setting up a separate crypto account or wallet with a crypto-specific broker. ETF shares can also be bought and sold throughout the trading day through virtually any broker, similar to publicly traded stocks.
Expect several spot Bitcoin ETF approvals at once
Few expect Ark Invest's 21Shares to be the only spot Bitcoin ETF to receive approval this week, however.
The SEC could technically approve or deny each individual spot Bitcoin ETF application as their respective deadlines arrive in the coming months. But that would also effectively mean the earliest to receive approvals enjoy a so-called "first-mover" advantage, with the lion's share of investors' capital flowing into those early spot Bitcoin ETFs right away. That would be a massive windfall for those ETF providers, considering some estimates indicate the approval of Bitcoin ETFs could potentially increase the value of the overall crypto market by more than $1 trillion.
Instead, the SEC will almost certainly approve multiple applications in tandem with the Ark Invest 21Shares deadline this week. This scenario has been repeatedly supported by industry watchers observing several hopeful ETF providers simultaneously filing amended registration statements with the SEC over the past few months. Indeed, just last week crypto news site Cointelegraph reported that Ark 21Shares, VanEck Bitcoin Trust, Grayscale Bitcoin Trust, and Fidelity's spot Bitcoin ETF each filed new 8-A Forms with the SEC to register their shares as securities listed on multiple exchanges, indicating they're in the late stages of approval.
That said, investors shouldn't ignore the risk (however unlikely at this stage) that the SEC might deny those multiple spot Bitcoin ETF applications this week. The SEC previously rejected Ark's proposal almost exactly one year ago, for example, citing a lack of measures "to prevent fraudulent and manipulative acts." If the regulatory body offers any similar unexpected opposition this time, I would be shocked if assets like Bitcoin, Ethereum, and Marathon Digital didn't experience a sharp pullback as crypto investors took their recent profits off the table.
