March 27, 2024
GBTC Discount Hits Lowest Since July 2021 Amid ETF Approval Optimism
Bitcoin News

GBTC Discount Hits Lowest Since July 2021 Amid ETF Approval Optimism

In a surge of optimism tied to the potential approval of a spot Bitcoin ETF, the discount of the Grayscale Bitcoin Trust (GBTC) has reached 10.35% below its net asset value, marking its lowest level since July 2021, according to data from Ycharts.

The GBTC allows investors to trade shares in trusts holding substantial Bitcoin holdings, with each share roughly tracking the price of Bitcoin. Since February 2021, GBTC has consistently traded at a discount relative to the actual Bitcoin price, reaching as low as 48% in December 2022.

Grayscale has long aspired to convert the Trust into a spot exchange-traded fund (ETF), allowing it to be traded on national securities exchanges such as NYSE Arca or Nasdaq, as explained by Grayscale Chief Legal Officer Craig Salm.

While the U.S. Securities and Exchange Commission (SEC) has historically rejected all applications for a spot Bitcoin ETF, including Grayscale’s, a recent development in October 2023 saw the Court of Appeals order the SEC to review Grayscale’s application. This decision followed Grayscale’s legal action against the SEC for refusing the fund’s conversion into an ETF.

Should the SEC reject Grayscale’s application again, it would need to find new grounds, as its previous justification—that the futures Bitcoin market lacked sufficient connection to the spot market—was deemed insufficient.

This court order coincides with growing optimism for the approval of a spot Bitcoin ETF, particularly with the entry of BlackRock, the world’s largest asset manager, into the sector in June 2023. BlackRock has been actively laying the groundwork for its Bitcoin ETF, with a ticker listed by the Depository Trust & Clearing Corporation (DTCC) in late October.

The anticipation of a spot Bitcoin ETF approval has had a positive impact on the crypto market, contributing to Bitcoin’s surge to an 18-month high of over $37,000 in the last week. As of the current publication, Bitcoin has stabilized around $37,000, trading flat on the day and up 5.4% in the last seven days.


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