The Grayscale Bitcoin Trust (GBTC) recently experienced a reduction in its discount, reaching a near one-month low in the wake of investment management powerhouse BlackRock filing for a spot bitcoin exchange-traded fund (ETF). In the past 24 hours, the GBTC share price has surged by over 8% to nearly $14, according to TradingView data, outperforming the digital asset in its portfolio. Within the same time frame, Bitcoin increased by 3.5% to $25,800.
Presently, CoinDesk calculations indicate that the discount is hovering around the 40% mark. Although this figure is the lowest it has been since mid-May, it is still substantially higher than the 35% level reported earlier this spring. Crypto enthusiasts have been eagerly awaiting the impact of BlackRock’s ETF filing on GBTC’s discount. The company is the world’s largest ETF provider and holds significant influence in the world of traditional finance.
ETFs from providers like WisdomTree, VanEck, Ark Investment Management with 21Shares, have seen their applications rejected by the U.S. Securities and Exchange Commission (SEC) over the past two years. However, many analysts believe that BlackRock’s application could be a turning point in the sector due to its size and track record. Out of 576 ETF applications filed by BlackRock, only one has been denied by regulators, as mentioned by Bloomberg’s senior ETF analyst Eric Balchunas.
However, Grayscale, a subsidiary of Digital Currency Group and CoinDesk’s parent company, is currently embroiled in a legal dispute with the SEC. The fund manager is appealing the SEC’s decision to deny the conversion of its closed-end GBTC fund into an ETF. This decision has resulted in the infamous “GBTC discount,” which emerged because the fund does not permit redemptions, forcing investors to sell their shares on secondary markets.
It is worth noting that during the previous crypto market rallies, GBTC shares traded at a considerable premium to net asset value. Crypto hedge fund Three Arrows Capital took advantage of this opportunity to harvest the premium, placing substantial bets on the fund. However, this strategy backfired when the shares shifted to a discount as crypto prices plummeted last year.
With the potential approval of BlackRock’s spot Bitcoin ETF, the investment landscape could be in for a significant change. While the outcome of Grayscale’s ongoing legal battle with the SEC remains uncertain, investors are undoubtedly keeping a close eye on the market trends to make well-informed decisions in the ever-evolving cryptocurrency space.
Source: Coindesk
