The Engine Driving the Bitcoin Bull Market Grayscale Lawsuit, Ethereum Futures ETF, and Bitcoin Spot ETF.

Bitcoin Bull Market Driven by Grayscale Lawsuit, Ethereum Futures ETF, and Bitcoin Spot ETF.

Author: Greg Cipolaro, Global Head of Research at NYDIG

Translation: WEEX

Main points of this article:

• Bankless Podcast Selection Exploring the SET Evaluation Framework for Blockchain Systems Which is More Important, the Technical Layer, the Ecological Layer, or the Social Layer?
• Disassembling Rollup Economics Business Models, Interoperability, and Layer 3
• Opinion The market’s focus is no longer simply on proving the superiority or inferiority of technology.

• The lawsuit between Grayscale and the SEC regarding the conversion of GBTC to an ETF is expected to be ruled on in the next few months.
• Wall Street institutions are joining the ETF application queue, despite the market usually favoring early adopters and not all products being economically viable.
• The recent price trend has validated the golden cross pattern observed six months ago – the short-term price performance has been poor, but there is potential for appreciation in the long term.

Expectations for the ruling on the Grayscale case fluctuate

Last Tuesday, expectations rose for a ruling on the legal case between Grayscale and the U.S. Securities and Exchange Commission (SEC) regarding Grayscale’s attempt to convert its Bitcoin Trust Fund (GBTC) into an ETF, but ultimately fell through.

On March 7, 2023, the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments from Grayscale, requesting a review of the SEC’s denial of its proposed change to list GBTC shares on the NYSE Arca, initially submitted on June 29, 2022. According to Grayscale CEO Michael Sonnenshein, the three-judge panel is expected to rule on this in the next few months, and the most accurate information we have is “by the end of autumn.”

The reality is that it is not possible to accurately predict the exact timing of such legal rulings. Just looking at the case information released in August, there is a wide range of observations from the argument to the court’s ruling, and there are many factors that can affect the court’s decision, many of which are not observable to outsiders – consensus of opinions, scheduling of other urgent matters, travel, and so on.

August cases at the U.S. Court of Appeals for the District of Columbia Circuit

Based on the range of observations from August rulings (minimum, average, maximum), we can infer that the ruling on the Grayscale case should be made as early as May 6, on average by September 13, and as late as January 30, 2024.

Editor’s note: Based on the August case information disclosed by the U.S. Court of Appeals for the District of Columbia Circuit, the number of days from oral arguments to the court’s ruling ranges from a minimum of 60 days to a maximum of 329 days, with an average of 190 days and a median of 180 days. Based on this calculation, the earliest date for the court to rule on the case between Grayscale and the SEC (oral arguments heard on March 7, 2023) would be March 7 + 60 days = May 6; similarly, the average and latest dates would be +190 days and +329 days, respectively.

The situation in mid-September seems to align with the expectation of Grayscale CEO before the end of autumn. However, we are very certain that the progress report for just one month in August is not a representative sample and cannot be used to draw conclusions about the timeline. In light of this, we will continue to pay attention to information released by the court in the coming weeks or months. Such information is typically released on Tuesdays and Fridays, but there is no specific date. The only thing we can be certain of is that the court will eventually make a ruling, and as time passes, we are getting closer to that date.

Wall Street is “stacking apps”

“Stacking sats” is an industry term used by Bitcoin holders who continuously increase their Bitcoin balance (sats is short for satoshis, the smallest divisible unit of Bitcoin). With more and more ETF applications, 4 of which were added last week, jokingly speaking, it seems like Wall Street is “stacking apps.”

According to our incomplete statistics, there are currently 17 ’40 Act funds (funds registered under the Investment Company Act of 1940) and 8 ’33 Act ETFs (ETFs registered under the Securities Act of 1933), as well as an application to convert the Grayscale Bitcoin Trust. If Wall Street succeeds, the available funding for investors will increase significantly.

In this situation, we want to know the market demand. While we are confident that demand will eventually materialize, especially for funds that offer investors access to new products such as spot ETFs, these products often have winner-takes-all characteristics and favor early adopters. Unless these products have sufficient differentiation in distribution, fees, or investment strategies, it is unlikely that so many similar products will be economically viable.

List of Futures ETF Applications

1. Valkyrie BTC & ETH Strategy ETF, Investment target: BTC and ETH futures, Application date: 8/4/23, Expected effective date: 10/3/23

2. Volatility Shares ETH Strategy ETF, Investment target: ETH futures, Application date: 7/28/23, Expected effective date: 10/11/23

3. Bitwise Ethereum Strategy ETF, Investment target: ETH futures, Application date: 8/1/23, Expected effective date: 10/15/23

4. Roundhill ETH Strategy ETF, Investment target: ETH futures, Application date: 8/1/23, Expected effective date: 10/15/23

5. Van Eck Ethereum ETF, Investment target: ETH futures, Application date: 8/1/23, Expected effective date: 10/15/23

6. Proshares ETH Strategy ETF, Investment target: ETH futures, Application date: 8/1/23, Expected effective date: 10/15/23

7. Proshares Short ETH Strategy ETF, Investment target: ETH futures, Application date: 8/1/23, Expected effective date: 10/15/23

8. Grayscale Ethereum Futures ETF, investment target: ETH futures, application date: 8/1/23, expected effective date: 10/15/23

9. Proshares BTC & ETH Strategy ETF, investment target: BTC & ETH futures, application date: 8/2/23, expected effective date: 10/16/23

10. Direxion Bitcoin Ethereum Strategy ETF, investment target: BTC & ETH futures, application date: 8/2/23, expected effective date: 10/16/23

11. Bitwise BTC & ETH Equal Weight Strategy ETF, investment target: BTC & ETH futures, application date: 8/3/23, expected effective date: 10/17/23

12. Bitwise BTC & ETH Market Cap Weight Strategy ETF, investment target: BTC & ETH futures, application date: 8/3/23, expected effective date: 10/17/23

13. Proshares BTC & ETH Equal Weight Strategy ETF, investment target: BTC & ETH futures, application date: 8/3/23, expected effective date: 10/17/23

14. ARK 21Shares Active Bitcoin Futures ETF, investment target: BTC futures, application date: 8/11/23, expected effective date: 10/25/23

15. ARK 21Shares Active On-Chain Bitcoin Strategy ETF, investment target: BTC futures, application date: 8/11/23, expected effective date: 10/25/23

16. ARK 21Shares Digital Assets & Blockchain Strategy ETF, investment target: BTC futures & stocks, application date: 8/11/23, expected effective date: 10/25/23

17. Valkyrie Ethereum Strategy ETF, investment target: ETH futures, application date: 8/16/23, expected effective date: 10/30/23

Spot BTC ETF Application List

Ark 21Shares BTC ETF, exchange: Cboe, delayed twice on June 15th and August 13th, expected next review dates: 11/11/23, 1/10/24 (Editor’s note: Maximum of 4 times 240-day review period, the final review will make the ultimate approval/rejection decision)

Bitwise BTC ETP Trust, exchange: NYSE Arca, delayed once on July 18th, expected next review dates: 9/1/23, 10/16/23, 1/14/24, 3/14/24

iShares BTC Trust (Nasdaq), Invesco Galaxy BTC ETF (Cboe BZX), VanEck BTC Trust (Cboe BZX), WisdomTree BTC Trust (Cboe BZX), Wise Origin BTC Trust (Cboe BZX) 5 products were delayed on the same day on July 19th, expected next review dates: 9/2/23, 10/17/23, 1/15/24, 3/15/24 (3 days later than Bitwise BTC ETP Trust)

Valkyrie BTC Fund, exchange: Nasdaq, delayed once on July 21st, expected next review dates: 9/4/23, 10/19/23, 1/17/24, 3/17/24 (3 days later than iShares BTC Trust and other 5 products mentioned above)

Reviewing Old Technical Signals

We won’t spend too much time discussing technical analysis in this article, but one group of signals we studied is crossovers, specifically the golden cross and death cross. A crossover occurs when one moving average line crosses another moving average line of a different time period. The golden cross that occurred this time was the 50-day moving average line crossing above the 200-day moving average line. The previous golden cross occurred in February, and we noted in our related article that it seemed more like a positive long-term indicator, with mixed short-term performance or even negative performance.

Since the last golden cross (without a death cross), 6 months have passed, and the recent crossover seems to confirm our previous observations: the golden cross appears to be a negative indicator in the short term (7-day and 30-day periods) and a positive indicator in the long term (90 days or more). Of course, we haven’t seen the trend of Bitcoin after the most recent crossover 360 days ago.

BTC performance in previous golden crosses

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