TL;DR Breakdown
- Grayscale’s share prices close against the Bitcoin price, now trading 17% below the BTC price, its lowest since December 2021.
- The SEC approval for the first Bitcoin ETF will likely increase the demand for the shares, further narrowing the current GBTC discount.
- Still, regulatory cards fall upon the SEC to approve, delay, or deny in making a conclusion on whether to allow the investment product.
- Data suggests that crypto investors are yet to embrace the full impact of having a BTC ETF in the market.
Description
Grayscale’s Bitcoin Investment vehicle (GBTC) share prices close against the Bitcoin price, now trading 17% below the BTC price. The discount between BTC and GBTC has dropped to its lowest since December 2021. Grayscale currently holds $17.10 billion worth of BTC. This follows a recent win by Grayscale against the Security Exchange Commission(SEC). In its … Read more
Grayscale’s Bitcoin Investment vehicle (GBTC) share prices close against the Bitcoin price, now trading 17% below the BTC price. The discount between BTC and GBTC has dropped to its lowest since December 2021.
Grayscale currently holds $17.10 billion worth of BTC. This follows a recent win by Grayscale against the Security Exchange Commission(SEC). In its ruling, the court stated that the SEC failed to prove the balance of probabilities that it had a reasonable explanation for stopping Grayscale’s move to convert GBTC into a spot Bitcoin ETF. This win saw the share price of Grayscale Bitcoins trust rise, reducing the gap on its underlying assets price.
Grayscale BTC discount hits lowest since 2021
The trust’s shares have traded at a discount to BTC’s market value since 2021, which reached lows of up to 50% in December 2022. The incapability of converting GBTC to BTC in a fund such as Grayscale significantly reduces its demand compared to other available alternatives such as Proshares Bitcoin Strategy ETF and Bitcoin ETFs, leading to undesirable discount.
The discount was closely correlated with the demand for the GBTC shares. The SEC approval for the first Bitcoin ETF will likely increase the demand for the shares, further narrowing the discount.
GBTC’s fortunes have improved greatly after the world’s largest asset manager, BlackRock, announced it intended to file an application for the United States’ first Bitcoin ETF. The news was excitedly welcomed by Grayscales officials, who were already in an ongoing battle with the SEC over turning GBTC into a spot ETF.
The SEC has not yet approved any spot application, frustrating decisions in many projects. The commission has delayed its decisions on the applications for Valkyrie Funds, Invesco, WisdomTreee Funds, and Blackrock. The Jacobi FT Wilshire Bitcoin ETF was recently launched on the European stock exchange in Amsterdam on August 15.
The final decision still falls on the SEC
Despite Grayscale’s win against the SEC, stating that the reasons for blocking the ETF were not convincing, it is still upon the SEC to approve, delay, or deny in making a conclusion on whether to allow the investment product. Bitcoin spot ETFs may be approved with Grayscale’s victory against the commission.
However, delays could potentially reduce the demand for the GBTC shares. Michael Sonnenshei, Grayscales CEO, stated that the success is a step closer to realizing the US spot Bitcoin ETF dream. The legal officer also noted that the assets management firm would work closely with the regulator to bring GBTC to the New York Security Exchange as a spot Bitcoin ETF.
The continued narrowing of the infamous discount will depend on the regulator’s final decision. According to the ETC Group CEO, the approval chances have increased after the win. However, the SEC can still appeal the court’s decision or deny applications for other causes. The discount has been reduced this year; however, this could widen if the market gets indications that the SEC is unlikely to make an approval.
Joy for the Bitcoin bulls?
At the time of writing, BTC currently traded below $25,500, according to data by CoinMarketCap. Historically, September is a bad month for BTC as it tends to make up to 10% losses. October, on the other hand, is historically bullish. A chart by Crptocon suggests watching out for signs of life from BTC in November during the pre-halving years.
The next Bitcoin halving is set to take place in April 2024. This replicates the theory that November 28 is the “bull launch date” for BTC price every four years. However, even with the Bitcoin ETF anticipation, the market still does not reflect optimism as what analysts term a muted response.
The GBTC impact, despite allowing investors to acquire BTC at a 24% discount, is still met with skepticism due to the structure of the fund and the uncertainty of the SEC approval.
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