The Securities and Exchange Commission (SEC) recently decided not to appeal a court ruling in favor of Grayscale Investments. And now, speculation is mounting in the cryptocurrency and broader investment communities that approval of spot bitcoin ETFs in the U.S. is imminent.
Some crypto experts believe the SEC could finally relent and green-light such ETFs before the end of this year. While there’s debate among crypto market observers about the extent to which a spot bitcoin ETF will lift prices of the largest digital currency, there’s no arguing that prices are already rallying and more upside could benefit assets such as the Invesco Alerian Galaxy Crypto Economy ETF (SATO).
SATO, which tracks the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity, Trusts, and ETPs Index, doesn’t directly hold bitcoin or any other cryptocurrency for that matter. But it is among the equity-based ETFs correlated to bitcoin price movements. That status could make SATO a beneficiary of spot bitcoin ETF approval.
SATO Ready for Primetime
SATO turned two years old earlier this month and its time on the market has been eventful. The ETF’s primary industry exposure is crypto miners. This group came under considerable duress during the crypto winter of 2022. That bad news is in the rearview mirror. If the SEC approves spot bitcoin ETFs, SATO could be primed for better things. And some experts believe it’s just a matter of time.
“It’s going to get approved… We think it happens this year in 2023,” said Galaxy Digital CEO Mike Novogratz in an interview with CNBC on Wednesday. “All the indications of dealing seem to be heading in the right direction.”
Novogratz, who is one of the biggest names in crypto investing, noted that Grayscale’s recent court victory could be a positive sign for spot bitcoin ETF approval.
“The judge said, ‘What are you talking about SEC? You have a futures ETF and you’re saying you can’t have a cash ETF. That makes intellectually zero sense.’ And I think that put the SEC on the back foot,” Novogratz told CNBC.
While approval of spot bitcoin ETFs would be a clear catalyst for SATO, the Invesco ETF has other avenues through which it could generate upside. For example, roughly 64% of the ETF’s 37 holdings are classified as small-cap stocks. Currently, the valuation gap between large- and small-cap equities is at a 20-year high. If that chasm narrows, small-cap equities could benefit.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for SATO, for which it receives an index licensing fee. However, SATO is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SATO.
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