Crypto Market Shakes as BlackRock Files for Bitcoin ETF and GBTC Soars

The uninterrupted downfall over the past 1.5 years has caused numerous cryptocurrency companies to face significant difficulties, leading to bankruptcy for over ten of them. These ripple effect bankruptcies, mainly caused by crypto loans granted to hedge funds, also highlight some general issues that all companies face. For instance, a decrease in volume has so significantly reduced crypto exchange revenues that they were forced to lay off thousands of employees.

However, things seem to be turning around. BlackRock’s plans for Bitcoin have already begun to stimulate excitement among institutional investors. Data from CoinGlass reveals that the Grayscale Bitcoin Trust (GBTC) hit near 2023 highs on June 17, with the GBTC “premium” dipping below -37%.

This shift in market sentiment came after news surfaced that BlackRock had applied to launch a Bitcoin spot price exchange-traded fund (ETF). This announcement led to a modest recovery in Bitcoin market sentiment late last week. The fear instilled in the market by the SEC’s actions has slightly subsided, allowing Grayscale, the company behind GBTC, to breathe a sigh of relief. Several GBTC investors had sued the company due to the negative premium, pushing the financially struggling Grayscale to file a lawsuit against the SEC over the ETF denial.

Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, speculated over the weekend on Twitter that “If the Blackrock ETF gets approved, the real winner here will be GBTC.” Many experts predict the imminent approval of the first Spot Bitcoin ETF, citing the political and economic influence of the asset management giant. To date, BlackRock has only received a denial for one ETF, as a result of its power and thoughtful action.

Cochran also added that he believes BlackRock’s proposal has a “good chance” of receiving US regulatory approval. While some argue this will be similar to a GBTC-like Trust, others, including Cochran, adopt a more nuanced view.

Cory Klippsten, CEO of Bitcoin financial services firm Swan, summarized by saying, “THERE’S NO HARM IN CALLING THIS AN ETF.”

“The 1933 Securities Act, NOT filed under Form N-1A (like 99% of stock ETFs), but under Form S-1. It will be listed on an exchange and can be redeemed by the issuer. Much better than GBTC. Now we wait to see whether the SEC will approve Blackrock’s spot Bitcoin ETF.”