Crypto analyst Brian Kelly has predicted that approval of a Bitcoin (BTC) exchange-traded fund (ETF) will “likeliest” and “earliest” come in February 2019, in an interview on CNBC’s Fast Money August 23.

Kelly’s forecast comes hot upon the heels of the U.S. Securities and Exchange Commission’s (SEC) rejection of nine BTC derivatives-based ETF proposals from three applicants August 22.

An ETF is a type of mutual investment fund that divides ownership of a commodity, derivative,  index, or basket of assets, into shares. The fund tracks the value of the underlying asset(s) and is traded on exchanges, with shareholders entitled to any positive returns.

ETFs are marketable securities that require oversight by government authorities, and the current and prospective regulatory status of crypto-related ETFs remains unresolved and avidly discussed.

Kelly pointed out that while the SEC has recently chosen to delay its decision on a separate and high-profile BTC ETF application from investment firm VanEck and financial services co. SolidX until this September, the regulator in fact has the option to again defer its final decision on the proposal until February at the latest. Kelly suggested the agency would be likely to choose to do so, citing four further grounds.

First, Kelly responded to the concerns voiced by the SEC in all of its BTC-related ETF rejections to date, these being the agency’s qualms over inadequate resistance to “fraudulent and manipulative acts and practices” in an insufficiently sized BTC derivatives market and the largely unregulated underlying spot market. Kelly argued that:

“[When] the SEC talked about fraud and manipulation, it wasn’t so much about preventing it, but how do they surveil it? Do they have an arrangement with other [globally or nationally regulated] exchanges [that would enable them to] surveil what’s going on?”

He then affirmed the SEC’s argument that the existing BTC futures market is “not mature enough” -- remembering that BTC futures were only launched on major U.S. exchanges CBOE and CME last December. But Kelly then argued that according to statistics from CME, the futures market is fast evolving and we will likely “have a much better shot” at ETF approval by 2019:

“Here’s CME Futures open interest of large holders. [As of] April, you’re starting to see a big increase… about an 85 percent growth rate. If you extrapolate that out, by February 2019, you’re going to have a very robust market here.”

Kelly added that the Intercontinental Exchange (ICE)’s recently unveiled initiative to launch a global, regulated digital assets ecosystem would further bolster the crypto spot and derivatives markets, and likely become part of the SEC’s equation.

He concluded by taking stock of breaking news that the SEC plans to review its fresh spate of ETF rejections, as well as voices within the agency -- notably SEC Commissioner Hester M. Peirce -- who have officially dissented from the regulator’s prior BTC-related ETF rejections.

As Kelly noted, a bullish sign of “sentiment change” that suggests we are coming “incrementally closer” to ETF approval is that the “market didn’t sell off” on news of the most recent disapproval orders. While Bitcoin took a temporary price hit on news of the rejections August 22, the coin quickly recovered back to its week-long trading levels.

As of press time, Bitcoin is trading around $6,528, up around 1.5 percent on the day and 1 percent on the week.