BTC is trading at its highest level since last May as researchers tip that the highly anticipated spot Bitcoin exchange-traded fund from the world’s largest asset manager, BlackRock, may be seeded this month.
On Oct. 23, Scott Johnson, a finance lawyer, flagged that an updated BlackRock filing indicated the firm may move to seed its iShares Bitcoin Trust with cash this month. Eric Balchunas, senior ETF analyst at Bloomberg, said the filing indicates BlackRock expects to launch the fund in the near future.
“Seeding an ETF is when initial funding is provided… to purchase a few creation units (in this case bitcoin) in exchange for ETF shares which can be traded in [the] open market on day one,” Balchunas tweeted. “Seeding is typically not a lot of money, just enough to get [an] ETF going… the fact they doing it and disclosing it shows another step in the process of launching.”
Balchunas also noted that the ETF was also listed on the Depository Trust & Clearing Corporation, which clears trades executed on the NASDAQ exchange. “Again all part of the process of bringing [an] ETF to market,” he said.
The filing ignited feverish momentum in the markets, with Bitcoin rallying 15% in 24 hours to tag a local high of $35,000, according to CoinGecko. Other top ten cryptocurrencies are up by between 5% and 8% over the same period.
Bullish Anticipation
BlackRock filed its application for a spot Bitcoin ETF in June, prompting a rush of similar filings from rival asset issuers.
While the U.S. Securities and Exchange Commission has approved futures-based Bitcoin ETFs in the past, such products invest in derivatives and thus do not impact the supply of BTC. By contrast, a spot ETF would invest in Bitcoin directly, driving scarcity for the asset’s supply.
Signs of progress towards the iSHARES Bitcoin Trust’s launch helped to pull the markets out of a multi-month downtrend. The combined crypto market cap is now on the cusp of retesting April’s year-to-date high of $1.28T after sitting at $1.03T last month.
Last week, an inaccurate tweet from the crypto media outlet, Cointelegraph, falsely claiming BlackRock’s ETF had received regulatory approval, sent Bitcoin flying 10% in an hour. However, the markets quickly gave back most of the gains when BlackRock rejected the tweet’s claim shortly after.
Start for free
Analysts at JPMorgan predicted the SEC will approve iSHARES Bitcoin Trust by January 10 — the deadline for its verdict on rival applications from Ark Invest and 21Shares.
JPMorgan recently said the SEC’s decision not to appeal a recent court ruling permitting Grayscale, a crypto asset manager, to convert its Bitcoin Trust into an ETF indicates a spot Bitcoin ETF approval is likely around the corner. Coinbase echoed the same sentiment in an Oct. 20 interview with CNBC.
Traders are closing the gap between the price of BTC and shares in Gryscale’s Bitcoin Trust in response to the news, with GBTC shares trading an 11% discount relative to BTC — its lowest level in two years, according to Ycharts.
SEC Commissioner calls for Bitcoin ETF approval
On Monday, SEC Commissioner Hester Pierce told CNBC she is frustrated that her agency is still yet to approve a Bitcoin ETF thus far.
“I’ve been thinking we should approve one for the last five years, the logic for why we haven’t has always mystified me,” Pierce said. “The agency has not been very good when it comes to anything related to Bitcoin or other crypto assets. Every day I hope that they will wake up and they will think ‘You know what, we need to take a more productive approach’.”
Pierce also cautioned investors against trying to predict the SEC’s next move regarding a Bitcoin ETF, comparing the exercise to tea leaf fortune-telling.
“I can’t say whether or not the commission is ready to approve a Bitcoin exchange-traded product,” Pierce continued. “The [Grayscale] court case obviously is an important factor in the landscape, but I can’t guess as to my colleagues’ approach to this topic… Obviously, we are seeing more and more interest from firms in these products, and I hear a lot of interest from investors in these kinds of products as well.”
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