August 31, 2023 - Grayscale Wins Lawsuit Against SEC on the matter of a bitcoin spot ETF.
The market led by Bitcoin rises about 5% following the news.

3 days later, the SEC rejects (again) all requests for a spot bitcoin ETF, among others of Blackrock, Fidelity and Vanguard.
The news kills the rally and Bitcoin returns to the 25,000-26,000 area again.

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The decisions were postponed until the middle of October (13-14) and according to Bloomberg analysts, there are 75% chances that the requests will be approved this time.

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First, let's understand what a spot ETF is

ETF (Exchange Traded Fund) is a type of pooled investment security that tracks a particular sector, index, commodity or other asset (Bitcoin in our case). ETFs can be bought or sold on the stock exchange in the same way that a common stock can.

The purpose of the ETF is to allow investors to gain exposure to Bitcoin without the need to worry about self-custody or purchasing on crypto exchanges.
With the ETF, investors will be able to purchase Bitcoin using their brokerage account.

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As of today, there are spot Bitcoin ETFs in Canada, Australia and they recently launched one in Europe as well.
In the US they have not yet approved, but futures ETFs and bitcoin trusts (like grayscale) exist.

WHAT IS THE DIFFERENCE BETWEEN A BITCOIN TRUST AND A SPOT ETF?

A trust fund is private and closed.
Its shares are non-redeemable, which means they cannot be exchanged for an asset (Bitcoin).
This is one of the reasons that the price in a trust fund tends to deviate from the price of the underlying asset.
This deviation creates a discount, or premium to the NAV of the underlying asset.

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A spot ETF, on the other hand, is open and public.
Its shares are redeemable and can be traded during normal trading hours in the broker's account.
Creation and redemption makes it possible to meet demand.
Similar to a trust fund, a spot ETF also has the possibility of a price deviation, and in such a situation authorized participants can take advantage of the arbitrage created. This helps the price to be close to NAV.

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So what's the deal with the whole ETF thing

As of today, the value of the asset under management of all asset managers that have applied for a spot Bitcoin ETF is estimated at more than 22.5 trillion dollar. Take a moment to let that number sink in.

Now, let's do a simple calculation.

Let's assume that after receiving the approval for a spot bitcoin etf, all asset managers will allocate 3% of the value of the assets under their management to purchase bitcoin (remember, it is necessary to purchase physical bitcoin)

This would create an equivalent purchasing power of $660 billion. Just for comparison, Bitcoin's market cap today is less than 550 billion.

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In addition to purchasing power, the approval of the ETF could affect bitcoin in other ways, such as giving additional legitimacy to bitcoin as a recognized asset type, could increase the liquidity of the bitcoin market, transparency and safety due to the regulation around the ETF And easy access for investors who don't want to mess with everything related to crypto.