👋 Hi finance enthusiasts and fellow investors!
Another crazy week in the crypto world. A few days ago we saw a +9% pump, followed by a -9% dump. But what exactly happened here?
The reason? It's all about the SEC and the Bitcoin Spot ETF applications. In this email, I'll explain what's going on as simply as possible so that everyone knows what's going on.
Before we start, shameless self-promotion! I was interviewed a few days ago and besides my daily routine we talked about crypto (after minute 8:36). If you want to support me, watch the interview and leave a like 🙏
What is the SEC?
The SEC, short for the U.S. Securities and Exchange Commission, is a government agency from the United States. They're in charge of ensuring fairness and transparency in financial markets, overseeing investments and trading, all to “safeguard” investors and uphold the market's integrity.
Gary Gensler was appointed by President Biden to head the US Securities and Exchange Commission. His approach and intentions against the crypto economy are questionable, the US courts even agree with the crypto community on this point.
Grayscale Wins Against the SEC
This headline was the reason for the pump this week 📈
Grayscale's victory over the SEC marks a significant advancement towards the establishment of a Bitcoin Spot ETF. However, it's important to note that this fight is far from over and that this decision doesn't automatically lead to a conversion of the GBTC Trust. A conversion would not even be a bullish thing in my opinion, more on that here.
The Federal District Court has reined in the SEC entirely. The court labels the SEC's decision-making as "arbitrary and capricious". Moreover, all the arguments that the SEC has previously presented over the years to reject a Bitcoin Spot ETF are now regarded as insufficient and incorrect. The SEC now has a 45-day window to appeal. If they decide to appeal, the case would be reviewed by all 17 judges instead of just 3.
What’s next?
The SEC has two options to assert its stance against allowing a Spot ETF.
First, it could remove existing Future ETFs from the market. The court's argument centers on the inconsistency of allowing Future ETFs while disallowing Spot ETFs.
Second, the SEC could focus on the custody and settlement of Bitcoin within an ETF, which wasn't previously relevant to Future ETFs.
Bitcoin Spot ETF Applications Delayed by SEC
This headline was the reason for the dump this week 📉
The SEC has given an update on most of the open applications for a BTC spot ETF and - as hopefully everyone expected - postponed its decision. Nevertheless, the market has not reacted very well to this, as some may have thought that an ETF approval was on the cards.
As can be seen in the picture below, the deadlines for a response from the SEC were to be expected. The SEC has postponed its decision for 7 ETF applications.
My Opinion & Next Steps
In the end, it remains to be seen whether the SEC's reluctance towards a Bitcoin Spot ETF is strong enough for them to risk further public scrutiny. Additionally, another legal dispute could be on the horizon. The most probable scenario in my view is that the SEC will eventually accept the court's reasoning without necessarily agreeing with it in substance. Sooner or later, this would lead to the approval of a Spot ETF, while the SEC maintains its original stance.
I think we will probably see a Bitcoin Spot ETF in early 2024, maybe even ealier. In my opinion it’s just a matter of time and I’m happy I positioned myself before this event.
Will it be the trigger for the next bull run? Could be - but we don’t know.
Also sooner or later the money printer will start again, and then I’m ready to ride the next wave.
Who else bought the dip?
Two weeks ago I shared my entry points. Is this something that would interest you more in the future? Or should I share my portfolio with you? Let me know!
If you are interested in my personal portfolio and would like me to share it with you, click below.
That’s it for today, I wish you all a nice weekend!
Cheers,
Stefan
Co-Founder CryptoExplorer
PS: For all those who want to know more, I have summarised an update on SEC vs ETH and SEC vs Binance below. After the embarrassment of the SEC against Ripple, now also an embarrassment followed in the case of Ethereum. It doesn't look so good for the SEC and Gary Gensler right now.
Ethereum - Security or Commodity?
Another blow for the SEC, which sees Ethereum as a security! A US court classifies Ethereum as a commodity.
The court, which is also overseeing the SEC's case against Coinbase, classified ETH as a commodity in its opinion on the Uniswap ruling, despite the SEC's previous view that anything other than Bitcoin is a security.
Previously, a proposed class action lawsuit alleging that leading "decentralised" crypto exchange Uniswap was responsible for harming investors by allowing scam tokens to be issued and traded has been dismissed.
SEC vs Binance
While everyone was looking at Grayscale developments in the last days, in the background there was new news in the legal battle between the SEC & Binance. The regulator filed a sealed motion with the court containing more than 35 pieces of evidence. The fact that this information is being withheld from the public is a highly unusual course of action for the SEC. The SEC is a civil (not criminal) enforcement agency. Therefore, unlike criminal filings, SEC filings are usually made in public and freely available to the public. According to US legal expert & former SEC official John Reed Stark, this could be for two reasons:
The SEC wants to prevent the US Department of Justice from interfering in the case by taking note of the evidence.
The SEC fears that the evidence will put companies or witnesses at risk. Currently, there is wild speculation about what the evidence is all about. The next few weeks will definitely be exciting!
Read his full assessment on Twitter.
Great summary 🙏