One of the major highlights of Grayscale’s victory over the US Securities and Exchange Commission (SEC) was its positive effect on Bitcoin’s price. However, renowned economist Peter Schiff has explained why Grayscale’s win may not be good for Bitcoin in the long run. A GBTC ETF ‘Bearish’ For Bitcoin Schiff tweeted that the GBTC fund becoming a spot ETF (Exchange-traded Fund) is “actually bearish” for the flagship cryptocurrency as he said this move could potentially increase Bitcoin’s “tradable supply.” Related Reading: Party In The USA: Ripple Gets Ready To Properly Celebrate Triumph Over SEC If approved, investors in the GBTC fund will now be able to redeem their Bitcoin, which Schiff has highlighted is bad for Bitcoin’s price and the market as GBTC will have to sell BTC into the market, thereby increasing the tradable supply. Schiff’s concern probably stems from the fact that GBTC reportedly owns over 3% of Bitcoin’s circulating supply, so a sell-off due to redemptions could significantly impact the market, causing Bitcoin’s price to reduce. However, other X (formerly Twitter) users quickly pointed out that other ETF applications will likely be approved alongside Grayscale’s application. As such, there will be enough demand to balance out the increase in supply that could result from Grayscale’s redemptions. Grayscale had applied to the SEC to convert its GBTC fund into a Spot Bitcoin ETF. However, the regulator rejected the application, leading Grayscale to file a lawsuit against the SEC, stating that the Commission acted arbitrarily and capriciously in its disapproval order. Following the Appeal court’s ruling in favor of Grayscale, the SEC now has to review the asset manager’s application again with the possibility of an approval higher this time. This is because Grayscale has been able to establish before the court that it should enjoy the same treatment given to Bitcoin Futures ETF which the Commission has had no problem approving. BTC price holds above $27,400 as euphoria spreads | Source: BTCUSD on Tradingview.com The SEC’s Next Steps Legal expert Jake Chervinsky also chimed in to state that the court delivered a “huge embarrassment” for the SEC. As to the next steps that the regulator might take, Chervinsky highlighted four theories. Firstly, he believes the SEC could just pick another reason to deny Grayscale’s proposal, which could lead to another long-running legal battle between both parties. Apparently, the court had ruled that the Commission didn’t provide sufficient reason to deny Grayscale’s application as it faulted the “significant market” test size as wrong. His second theory is that the SEC will choose to abide by the court’s decision and use that as an excuse to drop its “anti-ETF position.” Related Reading: Bloomberg Expert Analyst Explains Why A Fall To $10,000 Isn’t Bad For Bitcoin Furthermore, the legal expert noted that the SEC may have no choice but to approve the pending ETF applications as there is “political pressure” on the SEC. According to him, the world’s largest asset manager, BlackRock, and its CEO, Larry Fink, are lobbying for their application to be approved. Lastly, Chervinsky believes that the SEC’s Chair Gary Gensler could use this to spin the anti-crypto narrative by approving these ETFs to show that the Commission is willing to approve products that abode by their regulations. Featured image from iStock, chart from Tradingview.com
