In a monumental decision, the U.S. Court of Appeals has ruled that the Securities and Exchange Commission's (SEC) denial of Grayscale Investments' bitcoin trust conversion into an ETF was "arbitrary and capricious." This ruling has sparked optimism in the crypto community and raised hopes for the approval of a spot market bitcoin ETF.

The court criticized the SEC for failing to explain why it approved the listing of bitcoin futures ETPs but not Grayscale's proposed bitcoin ETP. This inconsistency in treating similar products was deemed unlawful by the court.

Following the ruling, the price of bitcoin surged by around 7.5%, reaching $27,911.67. The positive sentiment also lifted the broader crypto market and crypto-related equities.

The ruling paves the way for other bitcoin ETF applications, including those submitted by BlackRock, Fidelity, WisdomTree, VanEck, and Invesco, to have better chances of approval. A U.S. bitcoin ETF would offer investors a way to gain exposure to bitcoin without directly holding the cryptocurrency.

The SEC is currently reviewing the court's decision and determining its next steps. However, industry experts believe that the ruling signifies that the approval of a bitcoin ETF in the U.S. is inevitable and only a matter of time.

In light of this ruling, the crypto community awaits further developments to see whether the SEC will comply with the court's decision and provide clearer guidelines for the approval of bitcoin ETFs.