The US Securities and Exchange Commission's decision on the much-anticipated bitcoin exchange-traded fund (ETF) is expected by Friday, according to a source with knowledge of the agency’s deliberations.
The SEC has an 11th March deadline to make a decision regarding the proposed rule change that would clear the way for the ETF, which would be the first of its kind. Yet because the 11th falls on a Saturday, that decision will come before that date – potentially before Friday, the source said.
The decision, regardless of the outcome, will cap a more than three-year period since investors Cameron and Tyler Winklevoss first filed with the SEC in mid-2013.
Should the fund receive approval, some analysts have speculated that bitcoin markets could rise as a result. That expected approval appears to be baked into some quarters of the market already, driving the price to new all-time highs in recent days.
The digital currency's price continually neared $1,300 in recent sessions, reaching $1,293.47 on 3rd March, CoinDesk Bitcoin Price Index (BPI) figures show. However, bitcoin prices kept falling back during their climb toward $1,300, eventually experiencing a sharp drop on 7th March, during which markets plunged below $1,200 for a brief period.
On the other hand, analysts have argued that, should the SEC reject the rule change that would allow the Bats Global Exchange to list the ETF, bitcoin's price could be negatively affected.
Phil Bak, who was previously a New York Stock Exchange managing director and currently serves as CEO for ETF issuer ACSI Funds, told CoinDesk that, generally, the SEC seeks to avoid the appearance of "publicly rejecting an ETF". He went on to argue that, if the agency didn't plan on approving one of these funds, it would likely ask for the filing to be pulled ahead of any final decision.
Yet according to Bak, the lack of such a pullback so close to the deadline could be driven by other factors specific to the bitcoin ETF.
"In this case, the government agency may want to show the world it is unsure about bitcoin. Alternatively, it could also be that the advocates want to support it to the end and let this proposed fund get its day in court, rejection or not."
'A coin toss'
In the absence of a definitive statement from the SEC, it's perhaps easy to see why a common refrain of uncertainty has emerged the week of the decision.
As Arthur Hayes, co-founder and CEO of exchange platform BitMEX, explained:
"I have heard good arguments for and against the ETF being approved. At this point it is a coin toss."
Hayes' exchange is home to an ETF-tied prediction market, where traders can essentially bet on the outcome of the decision, and that has seen significant fluctuations over the past month. At times, traders have given the fund estimated chances of between 2% and 70%, depending on the day. At press time, the prediction market shows a roughly 50% estimated chance of approval.
Charles Hayter, co-founder and CEO of CryptoCompare, offered similar sentiment, stating that the fund's odds of receiving approval are "more than likely plucked out of the air on this one".
Those close to the industry aren't the only ones comparing the SEC decision to a coin flip.
For example, Bloomberg Intelligence senior analyst Eric Balchunas recently argued that the ETF has about a 50-50 chance of receiving approval.
The waiting game
For now, at least, those standing by for the SEC's decision can only watch and wait as the 11th March deadline grows nearer.
Yet, as argued by one analyst, those hoping for a conclusion to the years-long process might not get an answer until after that date.
Jeff Bishop, ETF expert and co-founder of investor message board platform RagingBull.com, speculated that, in the end, the SEC could punt its decision further past the 11th – particularly in light of recent price gains.
"I have the feeling they will find a way to delay this even more though. With bitcoin at all-time highs and the SEC having a terrible record for allowing new ETFs to come to market at absolute tops, they will likely push back on this until things cool a bit," he said.
That said, Bishop said he believes the ETF should be approved.
"It should be up to investors to decide the true price of bitcoin. The more liquidity and options [there are] to trade it, the more transparent and accurate the pricing will be," Bishop told CoinDesk, concluding:
"It should not be up to a government agency to withhold something like this from the public."
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