Bitcoin and the crypto market continued to rally on Wednesday after a US court cleared the way for the country’s first Bitcoin exchange-traded fund.
The decision brought some relief to crypto investors and a setback for the Securities and Exchange Commission, which is trying to rein in the digital asset industry.
Bitcoin, which has been particularly volatile in recent weeks, rallied 7% to nearly $28,000. A spot bitcoin ETF will allow traditional investors to access the digital asset without owning it.
Bitcoin is up about 65% this year but is still far behind its late-2021 high above $68,000. The three-judge panel of the DC Court of Appeals reversed the SEC’s decision to deny Grayscale Investments permission to launch a bitcoin-focused ETF. The panel said the regulator had failed to adequately explain why it had rejected the company’s application.
The legal victory is likely to open the door for a spot Bitcoin ETF in the United States. Advocates have long argued that allowing this type of product would allow more of the public to invest in Bitcoin without having to bother buying it outright or facing potential problems like problems with their care.
The SEC has rejected all the ETF applications it has reviewed so far, although a new pool of applicants is now hoping for success.
Judge Neomi Rao, writing the opinion of the DC Circuit Court of Appeals, said federal agencies are required to “treat similar cases equally”.
In requesting reconsideration of the Commission’s disapproval, Grayscale asserted that the bitcoin exchange-traded product it offered was physically like bitcoin futures exchange-traded products and should have been approved to trade on NYSE Arca. “We agree,” she said.
Grayscale Bitcoin Trust had its busiest trading session in 14 months, the frenzy caused by regulatory losses to US regulators making it more likely to turn GBTC into an attractive ETF for more investors.
According to data from Yahoo, nearly 20 million GBTC shares changed hands on the day, the most since the crypto market crash in June 2022. The share price jumped 18% to nearly $21, a high. the most since Bitcoin (BTC) hit $31,000 in mid-July.
The Securities and Exchange Commission recently approved two bitcoin futures funds for trading on national exchanges but declined to approve Grayscale’s bitcoin fund.
In addition, data collated from CryptoQuant, highlighted that Bitcoin reserves on non-US exchanges have increased over the past year, while the same number has decreased on US-based exchanges.
As such, CryptoQuant also points out that institutional buyers can consistently collect top crypto assets by market capitalization.
Considering the amount withdrawn and the wallet’s deposit and withdrawal records, institutions are constantly buying Bitcoins.
For example, in August alone, over 20,000 BTC, or about 25%, were withdrawn from Gemini. The research firm also noticed that investors are increasingly exposed to BTC derivatives and futures markets.