The Grayscale Bitcoin Trust (GBTC) discount narrowed to a two year-low following news that financial giants such as BlackRock and several others filed applications for a Spot Bitcoin ETF in June.
Narrowing GBTC Discount
At press time, GBTC is experiencing its lowest discount in nearly two years, with the discount to Bitcoin’s net asset value (NAV) narrowing to 14.78% as of October 17, per data from Coinglass.
The metric measures how a mutual fund or ETF is trading below its real net asset value, which is consequential to the entire Bitcoin market due to the Trust’s size.
The narrowing discount gained steam when financial giants such as BlackRock and other institutions filed for a Bitcoin Spot ETF in mid-June. The flurry of applications, which are expected to hit the market sometime in 2024, sparked speculation about more blue-chip crypto ETF conversions and applications, namely Litecoin and Ethereum.
On June 15th, the discount sat at 44%, which steadily fell to 26.7% by July 5th, only to shrink even further to date. Similarly, Litecoin’s (LTCN) discount rests at 11.31%, while Ethereum’s EETH discount is 23.72% at the time of writing.
The last time GBTC’s discount hit similar levels was in July 2021, after which Bitcoin reached an all-time high price of $69,000 in November that same year.
Grayscale holds $17.6 billion worth of BTC (620,000), $4.7 billion worth of Ether, and $94.3 million worth of Litecoin, among other assets.
Fake Spot ETF news
The fake news story by Cointelgraph (now retracted) which purported to show that the US Securities and Exchange Commission approved a Spot Bitcoin ETF caused Bitcoin to spike to $30,000, liquidating around $100 million open positions, per Coinalyze data.
— Chris on Crypto⏫Ł₿Ⓜ️🕸 (@ChrisOnCrypto1) October 16, 2023
Many in the crypto community believe that this volatile move is indicative of a market which has not yet priced in an approved Bitcoin Exchange Traded Fund.
The market shenanigans come a few days after the US SEC chose not to appeal the Grayscale decision on October 13th, which means an ETF approval is likely nigh, despite SEC Chair Gensler’s efforts to block all Spot ETF applications.
Gary Gensler public enemy number one?
Chair Gensler, who is increasingly despised by all stakeholders for his hostile treatment of the space, currently faces potential disciplinary action due to “delaying, misleading, and blocking access to the records” for the United States House Committee on Oversight and Accountability.
The SEC has faced no small amount of scrutiny for continually denying a Spot ETF, while simultaneously allowing riskier futures-based contracts.
For several years, the SEC under Chairman Gensler, funnelled investors into technically riskier financial products while encouraging growth of fraudulent institutions epitomised by the FTX exchange fraud, which stole billions of Dollars worth investor funds. Their actions have raised questions about the regulator’s culpability in capital destruction.
Grayscale on standby
On October 15, Grayscale issued a statement noting that the SEC’s 45-day period for seeking a rehearing had elapsed. The court is now expected to issue its “final mandate” within the next seven calendar days.
On its part, Grayscale said that it is operationally ready to convert GBTC into an ETF once the SEC approves the conversion application.
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