Bettors’ wagers on a BlackRock Bitcoin ETF approval are shifting — here’s what it means

Online punters are signalling that financial powerhouse BlackRock won’t get the nod from US regulators to launch its spot Bitcoin exchange-traded fund before the end of the year.

Odds of the US Securities and Exchange Commission approving BlackRock’s application before New Year’s Eve are about 5%, according to forecasting startup Manifold.

Similarly, punters on Polymarket, a blockchain-based betting site enabling users to speculate on events with binary outcomes, have put the price of it being approved before December 31 at 13.1 cents against 96.3 cents.

A bearish sign for the industry? Not quite. Bettors’ behaviour on the prediction markets is more an indication that they are more closely aligning with experts’ estimates that the SEC will approve ETFs at the start of 2024.

Bitcoin has surged by over 140% in 2023, in no small part thanks to the agency’s expected thumbs up for BlackRock and the dozen or so other firms with ETF applications.

So when do punters believe a spot Bitcoin ETF will be approved?

On both Manifold and Polymarket, bettors were more likely to wager that the SEC would approve BlackRock’s spot Bitcoin ETF in November, matching the timing of one of the agency’s deadline to approve a slew of those funds.

When that deadline came and went, the odds of an approval before the end of 2023 plunged.

At the end of last week, a wave of bullishness washed over crypto as long-term crypto critic and SEC Chair Gary Gensler said he is taking a renewed look at the issue.

Bettors on Manifold and Polymarket seem to be shifting their bets to a later day.

On Polymarket, users have to pay 84 cents against 19 cents that a spot Bitcoin ETF will be approved by January 15.

On Manifold, the odds that BlackRock will have its ETF approved by June 30 stands at 83%.

This aligns with comments made by market watchers. Eric Balchunas, a Bloomberg Intelligence ETF analyst who has become social media platform X’s go-to pundit for hot spot Bitcoin ETF takes, has said he expects the SEC to start approving spot Bitcoin ETFs by mid-January.

How do Polymarket and Manifold work?

Polymarket refers to itself as a prediction market where users can “profit from the things you know best.”

Polymarket and peer Manifold allow users to wager on different topics, hoping to also produce meaningful insights on current events.

“The probability is determined by how much users are betting on Yes or No,” James Grugett, co-founder of Manifold Markets, recently told DL News. “They are trading shares, like in a stock market, trying to make a profit, which leads to a wisdom of the crowds effect.”

Manifold users place bets with its play-money Mana, which can only be converted into charity donations or use them to make future bets.

Polymarket works in a similar manner, with users betting in USDC, Circle’s stablecoin.

The sites include bets on FTX founder Sam Bankman-Fried’s sentence after his guilty conviction last year; if there will be a nuclear disaster at the Zaporizhzhia nuclear power plant; and whether imprisoned Terra founder Do Kwon will be extradited to the US.

Prediction markets have courted controversy. This summer, Polymarket was catapulted into the spotlight when it allowed users to place bets on the doomed Titan submarine.

Eric Johansson is DL News’ London-based news editor. Got a tip on this or another story? Email him at eric@dlnews.com.