Mike Novogratz thinks the SEC will approve a bitcoin ETF as early as this year

Published Wed, Oct 18 202310:00 AM EDTUpdated Wed, Oct 18 20232:24 PM EDT

The crypto market has effectively been on pause — aside from a quick and short-lived spike this week — as investors wait for the U.S. Securities and Exchange Commission to give the green light to a bitcoin exchange-traded fund. Mike Novogratz says that could come as soon as this year. The CEO of Galaxy Investment Partners, which has its own application for a spot bitcoin ETF in partnership with Invesco in the SEC's queue, told CNBC on Wednesday that the tone has shifted, and things are looking up for crypto investors. "It's going to get approved — we think it happens this year in 2023," he said on CNBC's "Squawk Box." "All the indications … seem to be heading in the right direction" based on "public filings back and forth and the comments." "People's comments are much more constructive," he added. "All seems much more specific than general and that seems to be a good sign." Novogratz said the tone has been different since late August, when a U.S. appeals court ruled that the SEC was wrong to deny crypto investment giant Grayscale permission to convert its popular bitcoin trust, known by its ticker GBTC , into an ETF. That was widely considered a big win for crypto and has fueled hopes in the crypto community that the ruling would pave the way for the approval of one or more spot bitcoin ETFs. This week, bitcoin, as well as shares of Coinbase , briefly spiked on a false report that BlackRock 's proposed spot bitcoin ETF had been approved by the SEC. BlackRock first filed its application in June and several other institutional players including Galaxy followed, taking BlackRock's move as a bullish signal for bitcoin ETF prospects as well as the long-term trajectory of bitcoin itself. Although no bitcoin ETF has been greenlit still, Novogratz highlighted BlackRock's bitcoin blessing on Wednesday as another sign that "the dialogue with the SEC is all heading in the right direction." Ark Invest CEO Cathie Wood echoed that sentiment this week, telling CNBC's "Halftime Report" the "SEC is engaging with us for a bitcoin ETF application. … The fact the SEC chose to ask questions shows a change in behavior." "What it does tell you is the market will head higher on any positive news," Novogratz said. "It's no longer talking about how [bitcoin] works or why it's important. It's just a recognized macro asset and that's a huge psychological shift." He also noted that bitcoin has two vectors: adoption and macro. Throughout 2023, its price drivers have wavered between industry-specific catalysts and the macro, specifically the high interest rate environment, which historically have been bad for bitcoin. "Waiting for a slowing economy is like 'Waiting for Godot,' but the 2-year at five and a quarter [percent] — it doesn't have that much more downside," he said. "If that 2-year [yield] gets to 4.75% [or] 4.50%, you're going to see bitcoin a lot higher."