The United States Securities and Exchange Commission (SEC) could find itself in legal trouble if it rejects spot Bitcoin exchange-traded fund (ETF) applications, said JPMorgan. Although the chances of such rejection are very small still there is some probability, JPMorgan analysts believe it could lead to lawsuits against the SEC, creating difficulties for the regulatory agency.
SEC ordered to reconsider Grayscale’s Spot Bitcoin ETF application
The recent legal battle between the SEC and Grayscale Investments, ended with a court ruling in favor of the crypto asset manager, as reported by Todayq News. The SEC did not appeal the ruling and is now required to reconsider Grayscale’s application to convert its Bitcoin trust into a spot Bitcoin ETF.
JPMorgan predicts that multiple spot Bitcoin ETF approvals will arrive “within months,” and it’s becoming increasingly evident that asset managers are making progress with the SEC. They are addressing technical concerns and refining their filings to address issues related to market manipulation and the commingling of customer funds, among other matters.
Institutional interest drives optimism and Bitcoin price surges
Recent surges in Bitcoin’s price, with a nearly 20% increase and also marked 52-week high over the last week, are largely attributed to growing optimism surrounding the approval of a spot Bitcoin ETF.
Notably, this surge is caused by institutional demand rather than the retail-driven performance observed in previous quarters.
JPMorgan’s analysis also discloses that institutional investors are showing a strong interest in Bitcoin, as indicated by the rising activity in CME Bitcoin futures, which is mostly favored by institutions. The futures position proxy for CME Bitcoin futures has reached its highest level this year and is on par with levels seen in August 2022, prior to the FTX exchange collapse. Conversely, the equivalent proxy for CME Ethereum futures remains subdued.
Institutional inflows into larger Bitcoin wallets
Moreover, there has been a notable inflow of Bitcoin into larger wallets, highlighting the demand from institutional investors. This institutional interest is contributing significantly to the recent Bitcoin rally, making the prospect of a spot Bitcoin ETF approval a key focus for both the cryptocurrency industry and the SEC.