https://www.wsj.com/finance/regulat...-few-different-ways-96d76589?mod=hp_lead_pos4 The link is far superior from a graphic and video standpoint. The agency is widely expected to OK the first funds to hold the token, but there are no guarantees By Vicky Ge Huang Jan. 9, 2024 11:00 am ET 21 Bitcoin has soared in recent weeks in anticipation of regulatory approval. Crypto enthusiasts think the launch of the first U.S. exchange-traded funds that hold bitcoin is a done deal. But regulatory approval is still no guarantee, especially in the wild world of crypto. The Securities and Exchange Commission faces a final deadline Wednesday to approve or reject at least one of the 11 applications for such funds, which are known as spot bitcoin ETFs. Bitcoin has soared in recent weeks in anticipation of regulatory approval, climbing above $47,000, its highest level in about two years. Approval would be a two-step process: The SEC has to greenlight the filings known as 19b-4s from the exchanges that outline the rule changes permitting the new class of funds to trade, and make the registration statements from the asset managers effective, before the funds can start trading. Advertisement - Scroll to Continue Here are the four scenarios that could play out Wednesday: The SEC approves all 11 applications simultaneously Wednesday’s deadline applies only to the first applicant: a joint venture of Cathie Wood’s ARK Investment Management and crypto asset manager 21Shares. But crypto investors and ETF analysts are broadly betting that the SEC will approve all 11 applications simultaneously to avoid any perceived favoritism. First-mover advantage has been a common phenomenon in the ETF industry for years. For example, the first futures-based bitcoin ETF—the ProShares Bitcoin Strategy ETF —saw over $1 billion in trading volume on its first day in October 2021, far outpacing rival products that launched just a few days later. It remains the largest bitcoin futures ETF, with $2 billion in assets under management. If all the funds are approved at once, a brutal fee war is expected to break out in the crowded market. Some of the asset managers are taking a page from traditional finance to compete on cost, while others have begun a marketing push. The agency has previously delayed its decision on ARK’s application three times. Crypto investors and ETF analysts are betting that the SEC will approve all the applications simultaneously to avoid any perceived favoritism. The SEC rejects all 11 applications Although unlikely at this stage, the SEC could reject all 11 spot bitcoin ETFs. In the past, the agency has repeatedly blocked attempts to launch such funds on the grounds that they are vulnerable to fraud and market manipulation. If the SEC does reject this round of applications, though, it would have to come up with a materially different reason. A federal appeals court ruled in August that the SEC must reconsider crypto asset manager Grayscale Investments’ application to convert its trust into a spot bitcoin ETF. A circuit judge said the agency’s denial of Grayscale’s proposal was “arbitrary and capricious” in light of its approval of funds that track bitcoin futures. A split decision The SEC could approve or reject some of the applications while delaying its decisions on others. Asset managers and exchanges have been updating their filings over the past few months to incorporate feedback from the SEC staff. Theoretically, the SEC could reject applications that haven’t followed the agency’s guidelines, while approving those that have. Or, if the SEC decides that this latest round of tweaks to the applications still isn’t sufficient, the agency could reject ARK’s application and defer making decisions on the others until the next round of deadlines. The SEC could also ask ARK to withdraw its filing temporarily and reject the other applications on new grounds. ARK Investment Management CEO Cathie Woods PHOTO: ZED JAMESON/BLOOMBERG NEWS The SEC approves the filings from the exchanges, but stalls on S-1 and S-3 filings from asset managers Because there are no prior examples of the SEC approving nearly a dozen ETFs that hold the same asset all at once, it is uncertain whether the SEC will choose to approve the exchange’s 19b-4 filings or make the asset managers’ S-1 or S-3 filings effective first. The SEC’s division of trading and markets is responsible for reviewing the 19b-4 filings from exchanges. The division of corporation and finance is responsible for reviewing S-1 and S-3 filings from asset managers. Wednesday’s deadline is for the review of Cboe’s 19b-4 filing submitted on behalf of ARK and 21Shares. That means that the agency’s two divisions could be working on different timelines, leaving the funds in limbo if their registration statements aren’t declared effective. ETF analysts say they expect the two divisions likely coordinated to ensure that the approval occurs around the same time.
What you are now seeing come to fruition has been determined since 2022, not because the bitcoin etf is nearing approval. Price action is simply completing the C&H that started in Jun 2022, and the news is aligning with that...just like the news of ftx came just about the time for the C&H to bottom. The next action that is pre-determined is there will be a sell off after the initial Hooplah of the etf getting approved (I assume), so the handle can complete. This is also forecastable using EW but I am simplifying. Another possibility is the etf approval will get delayed (as mentioned) or will hit some "road block" which causes the selloff to complete the handle before getting approval and launching to new ATH's. The point is that it really doesn't matter what the catalyst...it doesn't even have to be related to bitcoin or even be explainable...we are all pawns to the C&H which is a rudimentary form of EW.