Yesterday, Grayscale won the right to convert its over-the-counter Grayscale Bitcoin Trust (GBTC) into an exchange-traded product after a court said the Securities and Exchange Commission could no longer deny the application. Today there’s an air of inevitability building around the prospects for approval of a spot-bitcoin ETF in the near future.

With that approval could come the entry of thousands of financial advisors—and their clients—into the cryptocurrency space, said Ric Edelman, founder of the Digital Assets Council of Financial Professionals (DACFP).

"Three-quarters of advisors (77%) say they will recommend bitcoin to clients once a spot bitcoin ETF becomes available,” Edelman told Financial Advisor via email. “This massive adoption will bring hundreds of millions of dollars—and possibly tens of billions of dollars—into bitcoin, leading to a significant price increase for bitcoin and other digital assets. In the absence of an ETF, advisors will rely on other vehicles that are already available: crypto [separately managed accounts], crypto grantor trusts, crypto ‘picks and shovels’ ETFs, bitcoin futures ETFs, crypto IRAs, crypto hedge funds and crypto VC funds."

Edelman believes Tuesday’s ruling, handed down by the U.S. Court of Appeals for the D.C. Circuit, means the approval of a bitcoin ETF could come any day now, and he’s of the view that any approval from the SEC is likely to cover a “stack” or “block” of similar proposed ETFs. 

Edelman says that to date there have been more than 50 rejected bitcoin ETF applications submitted to the SEC. Many ETF providers had given up hope of approval, until BlackRock entered the fray this spring with a proposal for its own spot bitcoin ETF. Several fund companies quickly filed their own similar applications after BlackRock.

The ruling requires the SEC to give the Grayscale application a fair and prompt review, reversing the commission’s previous flat denial. If approved, Grayscale’s proposal would turn Grayscale’s vehicle into an ETF. The ruling agreed with Grayscale’s argument that its proposal should receive the same consideration as any other commodity ETF proposal.

“It’s excellent that the judge in the Greyscale versus SEC case was able to see the obvious correlation between bitcoin futures and spot price,” said Greg Moritz, chief operating officer at crypto hedge fund AltTab Capital, in comments emailed to Financial Advisor. “Products like Grayscale’s holdings have converted to ETFs in other commodity markets, and it makes no sense to treat crypto differently.

“Rules for financial markets need to be based on data, not arbitrary and capricious sentiment toward a legitimate and growing asset class,” he added.

Block approval of what may be dozens of bitcoin ETFs is likely to come in the first quarter of 2024, according to Tim Bevan, CEO of ETC Group, a cryptocurrency exchange-traded product provider. That approval will lead to the release of years of pent-up institutional demand, which should have a positive impact on the prices of bitcoin and other cryptocurrencies.

But just how positive an impact would an ETF approval have? Edelman wrote in a recent white paper that approval of just one spot bitcoin ETF could cause token prices to immediately rise by 25%. In previous comments to Financial Advisor, he suggested that the value of one bitcoin token could rise to $150,000 by 2025—a view he maintained on Tuesday.

“The emergence of spot bitcoin ETFs onto the market strongly supports the attainment of a six-figure bitcoin price,” he said.