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Grayscale Bitcoin Trust Narrows as BlackRock ETF Application Fuels Investor Optimism

Updated: Jul 20, 2023


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STAMFORD, CT – The discount to net asset value (NAV) of the Grayscale Bitcoin Trust (GBTC), valued at over $19 billion, has been steadily narrowing following asset manager BlackRock's recent application to launch a spot bitcoin exchange-traded fund (ETF) in the United States. After experiencing a significant increase to nearly 50% late last year, the discount hovered around 40% for most of 2023. However, since BlackRock's mid-June filing with the U.S. Securities and Exchange Commission (SEC), the discount has been on a steep decline.


Grayscale Bitcoin Trust Discount


As of last week, it hit a low of 26%, the lowest level since May 2022, and currently stands at approximately 27%, according to data from Ycharts. The narrowing discount to net asset value (NAV) of the Grayscale Bitcoin Trust (GBTC) has been an encouraging development for investors, following asset manager BlackRock's application to open a spot bitcoin exchange-traded fund (ETF) in the United States.


The GBTC discount, which ballooned to nearly 50% late last year, has spent the majority of 2023 fluctuating between 40% and 40%. However, since BlackRock's mid-June filing with the U.S. Securities and Exchange Commission (SEC), the discount has been experiencing a rapid decline.


Recent data from Ycharts reveals that the GBTC discount reached a low of 26% last week, marking the trimmest level observed since May 2022. At present, the discount stands at approximately 27%, indicating a significant recovery in investor sentiment. BlackRock's move to pursue a spot bitcoin ETF has sparked a series of filings and re-filings from various industry players, including asset management giant Fidelity.


Spot Bitcoin ETF Approval


These actions by influential market participants have instilled hopes among investors that the SEC might finally grant approval for a spot bitcoin ETF, which has previously faced rejections over the years. The positive market sentiment surrounding potential approval has led to increased demand for GBTC, which has been trading at a considerable discount.


Grayscale had initially filed for GBTC's conversion into a spot bitcoin ETF two years ago, but the SEC rejected the filing, prompting the company to sue the regulatory agency. A decision on the lawsuit is expected by the end of the third quarter.


Furthermore, lawyers representing Grayscale recently bolstered their case by highlighting the SEC's approval of a leveraged bitcoin futures-based ETF, which they deemed an "even riskier" product than previously approved bitcoin futures ETFs. While optimism regarding the SEC's approval of a spot bitcoin ETF currently prevails, some investors exercise caution due to potential risks associated with the market.

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