Spot Bitcoin ETF update: The politics behind approvals according to investment bank TD Cowen

Investment bank TD Cowen says the US SEC will approve spot BTC ETFs as a matter of politics.
Per the bank, the SEC needs to prove itself as a crypto regulator before Congress considers more far-reaching crypto regulation.
The bank also believes the SEC would not want a loss on their score sheet on spot Bitcoin-ETF related matters.

Spot Bitcoin exchange-traded funds (ETFs) approvals remain the main theme in the cryptocurrency market as new year trading catches steam. With most cryptos flashing green on the daily and weekly timeframes, the show of optimism comes as the window for approval opens, with two forecasts overlapping.

Also Read: Bitcoin open interest hits $19 billion as Jim Cramer declares BTC ‘indestructible’

Spot Bitcoin ETF approvals are a matter of politics, TD Cowen

Spot BTC ETFs could be approved between January 2 and 3, according to a recent Reuters report, even as the January 5 to 10 hard deadline continues to hold forte, as predicted by ETF specialists James Seyffart and Eric Balchunas.

As the market rallies on FOMO (fear of missing out) as well as the ‘buy the rumor sell the news’ situation, American multinational investment bank TD Cowen has birthed a new line of argument, saying the US Securities and Exchange Commission (SEC) will approve spot Bitcoin ETFs by January 10 as a "political necessity.”

JUST IN : SEC will approve a Spot Bitcoin $BTC ETF as a 'political necessity" by the January 10th deadline says TD Cowen pic.twitter.com/GsI58tauIs
— Barchart (@Barchart) January 2, 2024

According to TD Cowen, Per the bank, this is because the financial regulator has cause to prove itself as crypto regulator before Congress considers more far-reaching crypto regulation such as looking towards broader crypto legislation. The bank also believes the SEC would not want a loss on their score sheet on spot Bitcoin-ETF-related matters.

TD Cowen on possible Spot BTC ETF approvals

Meanwhile, Cathie Woods’ Ark Invest/21Shares spot BTC ETF is in the leading position for approvals, considering January 10 is the deadline for the SEC to give a determination on its application as the first filer. However, analysts anticipate a joint approval as the financial regulator does not want to present itself as a kingmaker.

Meanwhile, a K33 Research report by analyst Vetle Lunde indicates the probability of the sell-the-news scenario is as high as 75% against 20% odds for approval inflows pushing prices higher. Still, there is a 5% probability that the filings will be denied.

Lunde writes, “A sell-the-news event could become a self-fulfilling prophecy as a significant share of short-term market participants has eyeballed the event as an area for profit taking.” The analyst also highlights that traders appear to be significantly exposed ahead of the financial regulator’s determination, with derivatives pushing massive premiums following a three-month series of Bitcoin price moving north.

Crypto ETF FAQs

What is an ETF?

An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

Is Bitcoin futures ETF approved?

Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

Is Bitcoin spot ETF approved?

Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.

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