Today is the day we expect to see the SEC approve multiple Bitcoin ETFs including $GBTC. The announcement could come at any time, but is most likely to be after the close. A few points:
1) Yesterday, the SEC posted on X (Twitter) that it had approved the ETFs, then withdrew that stated approval claiming they were hacked. Speculation immediately started whether the SEC was hacked or an intern mistakenly posted the good news too early. X claims the SEC was hacked because the SEC didn’t approve 2 factor authentication on its account. (Obvious irony that the regulatory agency tasked with keeping us safe from securities fraud doesn’t use the most basic tools to secure their own communications.)
2) The market reaction confirmed the DKI thesis that ETF approvals will push Bitcoin prices up in dollars rather than the “buy the rumor / sell the news” thesis I have been critical of in recent posts. When the mistaken tweet went out, Bitcoin rose immediately, then came back down when the SEC issued its denial. I don’t know where Bitcoin will trade a week or a month from now, but I do think institutional acceptance means more money coming into an asset with a deflationary issuance schedule.
3) Barron’s wrote an article this morning claiming the hack reduced the credibility of Bitcoin. That’s nonsense. An entire community and asset class isn’t responsible for the prank of one member. Also, Barron’s assumes it was a pro-Bitcoin person who hacked the SEC X account. It could have just as easily been someone who was short Bitcoin who wanted to take advantage of the predicable ensuing denial. Or an intern who posted too early.
4) There were reports this morning that the SEC was turning around comments and regulatory filing edits intra-day yesterday. That’s indicative they plan to approve the ETFs this week. Otherwise, there’s no reason to rush. No regulatory agency turns around comments in a day to give a “no” answer.
5) The downside: I have seen multiple situations where the SEC, the DoJ, or the FTC ignore a deadline and take longer than they are allowed to evaluate a situation. Typically, the companies subject to these missed deadlines agree to be patient rather than rush the proceedings and increase the probability of a “no” answer. $GBTC is in this situation currently and is more than a week past the deadline for the SEC to respond. They’re “playing nice” by waiting. Should today pass without SEC approval, I would expect Bitcoin and $GBTC to trade down. In that event, I plan to be patient and not take action. While temporarily disappointing, this potential non-approval by the SEC doesn’t solve any problems with the debasement of the fiat dollar or the positive case for a deflationary asset/currency like Bitcoin.
IR@DeepKnowledgeInvesting.com if you have any questions.
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