Bitcoin climbs with a vengeance and rises above $27,000 thanks to Grayscale and 'bad news'

Bitcoin has risen strongly (+7%) and has surpassed $27,000 ($27,645), finally moving away from the $26,000 to which it clinged to for weeks. The cryptoqueen has benefited due to several aspects. On the one hand, the courts have ruled in favor of Grayscale against the US SEC for the review of the Bitcoin ETF. On the other hand, the latest bad macro data in the US pushes away the possibility of another Federal Reserve (Fed) rate hike in September, which also has a positive influence.

The US courts have ruled in favor of Grayscale in its litigation against the Securities and Exchange Commission (SEC) following the regulator's denial of the fund manager's application to create a Bitcoin (BTC) spot exchange-traded fund (ETF).

Thus, U.S. Court of Appeals Circuit Judge Neomi Rao has ordered that Grayscale's petition for review be granted and that the SEC's order denying the listing application be vacated.

The SEC in June rejected Grayscale's application to convert its flagship Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund, arguing that the proposal did not comply with rules designed to prevent fraudulent practices and protect investors. Grayscale sued the SEC almost immediately after its proposal was denied, alleging that the regulator was acting arbitrarily in rejecting applications for spot Bitcoin ETFs when it had previously approved Bitcoin futures ETFs such as ProShares' BITO.

Grayscale's lawsuit against the SEC has been closely watched by investors as a key catalyst that would shake up a market marked by low volatility and liquidity. Earlier this month, Bitcoin trading volatility fell to its lowest level in more than four years, as investors have been on the sidelines awaiting greater regulatory clarity on cryptocurrency, either through new congressional legislation or through the possibility of launching a Bitcoin spot ETF.

"The denial of Grayscale's proposal was arbitrary and capricious.... The Commission failed to adequately explain why it approved the listing of two Bitcoin futures ETPs but not Grayscale's proposed Bitcoin ETP," the court declared in the ruling. "In the absence of a coherent explanation, this different regulatory treatment of similar products is unlawful. We therefore grant Grayscale's petition for review and vacate the Commission's order."

'BAD NEWS IS GOOD NEWS'

Another factor helping to boost Bitcoin is the poor macro data released in recent hours in the U.S., which has also led to rises in stock markets as it cools the possibility of another rate hike by the Federal Reserve (Fed) in September.

"Yesterday was a typical 'bad news is good news' day. Risk-off sentiment in the US and around the world was boosted by an unexpected drop in US JOLTS job openings below 9 million jobs in July, the lowest levels for more than two years, and an unexpected drop in consumer confidence in August. The weak data kept Fed hawks on the sidelines and reinforced expectations of a September pause, as well as tilting the odds in favor of no hike in November," explained Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Translator: Alejandra Zamora