Bitcoin is tantalizingly close to breaking past its price from just before the terra usd stablecoin melted down in May 2022.

Why it matters: It's a sign that the world's biggest cryptocurrency may have shaken off the bad news. And — as the bellwether for the whole crypto industry — when bitcoin rises, every other coin and token rises with it, Brady writes.

By the numbers: As of this writing, bitcoin is trading at $33,425. It briefly touched $35,000 yesterday on CoinGecko, but it has largely hovered just below.

• CoinGecko is putting its seven-day rise at 17.2%.
• To recover from Terra, though, it will need to hold a level near $37,000 (where it stood just before Terra's collapse). It's not there yet.

What's happening: The consensus is that people are anticipating a spot bitcoin ETF finally getting approved.

• Gold ETFs coming in 2004 were a game changer for that asset's price, as Matt Hougan of Bitwise noted in a social media post.

What they're saying: "Rumors are flying since the appearance of BlackRock's bitcoin spot ETF ticker on a list at the Depository Trust & Clearing Corporation (DTCC), including that the world's largest asset manager has already started purchasing bitcoin for the fund," Stefan Rust, CEO of data aggregator Truflation, said in a statement.

Yes, but: CoinShares analyst Ioana Roibu shared a research note that showed more muted inflows of capital into bitcoin, compared to prior rounds of ETF excitement.

• Meanwhile, headwinds have hit the company that blazed that trail. (See below.)

Fresh off a win against a major regulator, the future for Grayscale Investments looks bright, save for the looming civil fraud suit against its parent company Digital Currency Group, Crystal writes.

Driving the news: Grayscale and the London Stock Exchange Group's index giant FTSE Russell are rolling out a "sector index series," a classification framework meant to guide advisers and investors on how to invest in cryptocurrency beyond just parking everything in bitcoin (more on this below).

• The firm behind GBTC, the world's largest bitcoin trust, is changing the conversation with a major index brand and beckoning at the idea of more digital-asset investment products to come.

🐘 The elephant in the room: But there's that parent.

• Last week, New York Attorney General Letitia James sued DCG, its founder and CEO Barry Silbert, its bankrupt trading subsidiary Genesis Global, and Earn lending program partner Gemini, alleging they defrauded investors out of more than $1 billion.

The intrigue: The AG's suit seeks to block those parties from conducting essentially any business tied to securities and commodities within or from the state.

• If the suit sticks, it could prompt DCG to sell its businesses, including its crown jewel subsidiary Grayscale and its Bitcoin Trust, which, according to Morningstar analyst Bryan Armour, has generated more than $1 billion in fees since 2021.

Zoom in: Blocks away from its headquarters at 250 Park Avenue South in New York, reporters mingled with Grayscale and FTSE Russell executives at an upscale pizza and pasta joint and, at one point, asked about that elephant.

• Axios followed up by asking: If the NYAG's suit is successful, will Grayscale have to move out from DCG's umbrella to conduct its business?

What they're saying: "That has not been the discussion," Grayscale CEO Michael Sonnenshein tells Axios, saying the firm's focus has been the sector framework and its partnership with FTSE Russell.

• "DCG is being sued under the Martin Act as well as New York State consumer protection laws," it said in its third-quarter investor letter sent today, a copy of which was seen by Axios.
• "These are sweeping statutes granting the AG extremely broad powers, which have low standards of proof and do not require the AG to allege or prove wrongful intent for many of its claims," the firm wrote to investors.
• It has yet to formally respond to the civil suit.

State of play: Out of DCG's shadow, Grayscale could keep winning.

• Flashback: The SEC let an Oct. 13 deadline pass without appealing a high-profile court decision that found the agency was wrong to reject the firm's application to transform GBTC into a spot bitcoin exchange-traded fund.

The largest bitcoin fund in the world is staging a comeback, Crystal writes.

• And it's just in time to ride the BTC rally.

Driving the news: GBTC has been on an upward trend since the gap between the price of its shares and bitcoin widened to almost 50% in late 2022/early 2023.

• Be smart: GBTC holders had no way of redeeming their shares for bitcoin, other than pushing Grayscale and its parent DCG for a redemption program in the trust's current structure or waiting for an ETF conversion.

State of play: That discount is now just 11%, in part because the market is anticipating a spot bitcoin ETF approval that could close that gap.

• Sonnenshein says it's now "a matter of when, not if."

The bottom line: The eager refrain of "wen bitcoin" won't stop till it happens.

With the SEC on the cusp of greenlighting more digital asset investment products, Grayscale and FTSE Russell want to redefine how crypto investors approach investing, Crystal writes.

Zoom out: The investment firm and the index provider teamed up to sectorize the hundreds of constituents in the space in a bid to help folks understand how the pieces work together.

• It's an educational effort, they say, much like the GICS classification system did for the wider industry.

Flashback: In 1999, index providers MSCI and S&P Dow Jones Indices categorized companies traded on stock exchanges by sector, industry groups, industries and sub-industries.

• The goal was to help analysts and other investment professionals wrap their heads around the different swaths of the market, whether they be banks or auto companies.

Details: Likewise, Grayscale and FTSE Russell came up with five sectors for digital assets distinguished by how the protocol works, its use case and how it provides investable exposure.

• The sectors: currencies; smart contract platforms; financial; consumer and culture; and utilities and services.
• Under currencies, examples include bitcoin, XRP and litecoin.
• Smart contract platforms would include Ethereum, Solana, Polygon, and Cardano.
• Uniswap is a financial, as is Aave and Maker.
• Dogecoin would fit under consumer and culture.
• Chainlink and Lido are examples of crypto utilities.

Quick take: Sectorizing crypto stands to boost Grayscale and FTSE Russell's revenue streams — the more one can slice up the universe and index them, the more investment products will line up to license and create funds and ETFs out of them.

🕸 Binance is pushing back on the CFTC's suit (CoinDesk) as a U.K.-based compliance chief leaves the company. (The Block)

🌍 How FTX sucked students in Africa into a referral marketing scheme. (CoinDesk)

💼 SBF's defense is proposing their own financial expert to counter the prosecution's. (CoinDesk)