There is a very material chance that it won't be approved. This is not a bearsh event, despite the fact Bitcoin will most assuredly sell off and do so sharply. Let's take a cursory look at what the SEC wants, and what it has received thus far in regards to bitcoin submissions.
The SEC's declination letter, says, and I quote:
"The Commission views the Exchange’s proposed surveillance procedures regarding the Shares themselves as necessary, but not sufficient in light of the discussion below noting that the Exchange has not entered into, and would currently be unable to enter into, surveillance-sharing agreements with significant, regulated markets for trading either bitcoin itself or derivatives on bitcoin.100 Moreover, the Commission does not accept the premise, suggested by some commenters, that regulation of trading in the Shares is a sufficient and acceptable substitute for regulation in the spot or derivatives markets related to the underlying asset."
In short, the underlying of the Trust has to be regulated in order for the SEC to consider it safe enough for manipulation surveillance. Of course, the Winkelvoss brothers' ETF submission wasn't based upon a regulated underlying, because to date- there is no US federally regulated bitcoin trading entity (at least that i know of, and apparently none that the SEC knows of as well).
This also boils down to the index construction that both the SolicX and the Winkelvoss twins used - both use pricing indices that are largely reliant on unregulated exchanges in foreign domiciles, to note:
With respect to spot bitcoin trading outside the United States, the information in the Exchange’s proposal and from commenters demonstrates that the bulk of bitcoin trading occurs in non-U.S. markets where there is little to no regulation governing trading,
This is no longer the case, hence is rebuttable, but...
The Exchange notes in its comment letter that only a minority of the global spot bitcoin exchanges are subject to any regulatory regime.105 Additionally, the Commission notes that no bitcoin spot market is currently a member of the Intermarket Surveillance Group.
Note these excerpts from SolidX's submission for their ETF...
They are almost the same as what has been rejected by the SEC re: Winkelvoss.
Fear not, the SEC laid clear a very obvious solution (which we will not get into here) that makes known to anyone who is paying attention that they are quite open to having a bitcoin ETF in the US. As a matter of fact, they (like I) seem to believe it is a forgone conclusion.