The rumor has come true: The world’s largest asset manager, BlackRock, has filed a Bitcoin spot ETF application with the US Securities and Exchange Commission (SEC). For custody and market price data, BlackRock is choosing Coinbase, despite the SEC lawsuit. And while the news sounds extremely bullish for the BTC price, the community is wondering whether BlackRock’s entry into Bitcoin is good or bad.
For many years, a Bitcoin spot ETF has been seen as the holy grail for Bitcoin in the US to attract huge amounts of new capital. So far, various asset managers have cut their teeth at the SEC when it comes to Bitcoin spot ETFs.
The SEC however has a long history of denying spot ETFs citing concerns about market manipulation and the lack of a surveillance-sharing agreement between a “regulated market of significant size” and a regulated exchange
11/ pic.twitter.com/yqwhy3wLT3
— thiccy (@thiccythot_) June 16, 2023
What Are The Chances For A BlackRock Spot ETF?
Although there are already future-based ETFs in the US, these do not require the settlement of “real” Bitcoin, as they are simply settled in cash. A spot ETF, on the other hand, promises significant inflows. As Joe Consorti, market analyst at The Bitcoin Layer, explains, the “floodgates for institutional liquidity” could finally open.
Therefore, everyone wants to be the first to get approval from the SEC, as was the case with gold in 2004. And given its reputation, BlackRock has the “highest likelihood” of any previous attempt to get a spot ETF approved, as Consorti notes. BlackRock is the most powerful and best politically connected asset manager in the world.
Obviously, it will make a difference whether the Winklevoss twins or Grayscale file a spot ETF application or the world’s largest asset manager, led by Larry Fink. For SEC chairman Gary Gensler, however, the application comes at the worst possible time.
A refusal by BlackRock is also likely to be more difficult for Gensler. Messing with Blackrock and incurring even more trouble because of the flimsy justification for a Bitcoin ETF rejection would not be politically smart for the agency.
BlackRock’s partnership with Coinbase is an interesting point, however, which is likely to make Gensler sweat. Nevertheless, a Bitcoin spot ETF application has probably never had a greater chance of “opening” the floodgates to institutional capital.
Good Or Bad For Bitcoin?
Apart from the money inflows, the critical voices in the community are nonetheless multiplying, also because BlackRock is in fact the purported “enemy”. The renowned analyst Pentoshi writes:
Everyone before: We hate blackrock, we hate the suits, screw the system, they are frauds
Everyone down 99%: Wow blackrock is getting in. This is great! In 2 years I might only be down 90%!
Analyst and co-founder of Reflexivity Research, Will Clemente, meanwhile, states that it is “undeniable” that Operation Chokepoint 2.0 was orchestrated when BlackRock “to drive out domestic crypto companies and bring in big traditional companies that are friends with the US government to try to control Bitcoin/crypto” if BlackRock gets the approval by the SEC.
Bitcoin educator Anil (@anilsaidso) has examined BlackRock’s ETF application and found a “hidden gem” in the ETF submission. According to the document, in the event of a hard fork, BlackRock has the discretion to decide which network it deems suitable. Moreover, there is no guarantee that BlackRock will choose the fork that is ultimately the most valuable.
A hidden gem in the BlackRock ETF filing.#GetForked https://t.co/tER6xxZPui pic.twitter.com/Qdt8BZ2OEZ
— Anil ⚡ (@anilsaidso) June 15, 2023
It is unclear when the SEC will decide on the application. The SEC has up to 240 days to make a decision and has always exhausted this time in recent years. If so, a decision would come in mid-February 2024, remarkably just one month before the Bitcoin Halving.
At press time, the BTC price stood at $25,552, recapturing the 200-day EMA (blue line).
Featured image from Reuters, chart from TradingView.com