Renowned Economist Explains Why Grayscale’s Win Is Not Good For Bitcoin Price
30 August 2023 - 7:40PM
NEWSBTC
One of the major highlights of Grayscale’s victory over the US
Securities and Exchange Commission (SEC) was its positive effect on
Bitcoin’s price. However, renowned economist Peter Schiff has
explained why Grayscale’s win may not be good for Bitcoin in the
long run. A GBTC ETF ‘Bearish’ For Bitcoin Schiff tweeted
that the GBTC fund becoming a spot ETF (Exchange-traded Fund) is
“actually bearish” for the flagship cryptocurrency as he said this
move could potentially increase Bitcoin’s “tradable supply.”
Related Reading: Party In The USA: Ripple Gets Ready To Properly
Celebrate Triumph Over SEC If approved, investors in the GBTC fund
will now be able to redeem their Bitcoin, which Schiff has
highlighted is bad for Bitcoin’s price and the market as GBTC will
have to sell BTC into the market, thereby increasing the tradable
supply. Schiff’s concern probably stems from the fact that
GBTC reportedly owns over 3% of Bitcoin’s circulating supply, so a
sell-off due to redemptions could significantly impact the market,
causing Bitcoin’s price to reduce. However, other X (formerly
Twitter) users quickly pointed out that other ETF applications will
likely be approved alongside Grayscale’s application. As such,
there will be enough demand to balance out the increase in supply
that could result from Grayscale’s redemptions. Grayscale had
applied to the SEC to convert its GBTC fund into a Spot Bitcoin
ETF. However, the regulator rejected the application, leading
Grayscale to file a lawsuit against the SEC, stating that the
Commission acted arbitrarily and capriciously in its disapproval
order. Following the Appeal court’s ruling in favor of
Grayscale, the SEC now has to review the asset manager’s
application again with the possibility of an approval higher this
time. This is because Grayscale has been able to establish before
the court that it should enjoy the same treatment given to Bitcoin
Futures ETF which the Commission has had no problem
approving. BTC price holds above $27,400 as euphoria spreads
| Source: BTCUSD on Tradingview.com The SEC’s Next Steps Legal
expert Jake Chervinsky also chimed in to state that the court
delivered a “huge embarrassment” for the SEC. As to the next steps
that the regulator might take, Chervinsky highlighted four
theories. Firstly, he believes the SEC could just pick another
reason to deny Grayscale’s proposal, which could lead to another
long-running legal battle between both parties. Apparently, the
court had ruled that the Commission didn’t provide sufficient
reason to deny Grayscale’s application as it faulted the
“significant market” test size as wrong. His second theory is
that the SEC will choose to abide by the court’s decision and use
that as an excuse to drop its “anti-ETF position.” Related
Reading: Bloomberg Expert Analyst Explains Why A Fall To $10,000
Isn’t Bad For Bitcoin Furthermore, the legal expert noted that the
SEC may have no choice but to approve the pending ETF applications
as there is “political pressure” on the SEC. According to him, the
world’s largest asset manager, BlackRock, and its CEO, Larry Fink,
are lobbying for their application to be approved.
Lastly, Chervinsky believes that the SEC’s Chair Gary Gensler could
use this to spin the anti-crypto narrative by approving these ETFs
to show that the Commission is willing to approve products that
abode by their regulations. Featured image from iStock, chart
from Tradingview.com
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