Grayscale Files With SEC to Convert Its Bitcoin Trust to ETF — GBTC Discount Drops

Key Takeaways:

• GBTC discount drops below 14% – narrowest since December 2021.
• What does the narrowing mean?
• The possible spot ETF approval spurred the GBTC.

YEREVAN (CoinChapter.com) — New York-based Grayscale Investments has filed a new registration with the US Securities and Exchange Commission (SEC) to convert its namesake Bitcoin Trust (GBTC) to an exchange-traded fund (ETF).

The decision comes two months after a court ruling directed the commission to review Grayscale’s application. Last week, the SEC decided against appealing the ruling.

GBTC Discount Drops to Two-Year Low

As of Oct. 19, GBTC was trading at a 13.9% discount to Grayscale Trust’s net asset value (NAV), the near-narrowest discount since December 2021.

Notably, the trust had $17.5 billion in assets under management (AUM) and, as mentioned, offered a nearly 14% discount for GBTC. It means that Grayscale apparently holds $25.3 worth of Bitcoins per share in their treasury.

However, stock market traders can buy the same Bitcoin-backed GBTC share for $22.20, or 14% less than the Grayscale holding price per share.

Notably, the discount typically appears in bear markets, i.e., when enough traders sell their GBTC, the stock’s actual value is less than the Bitcoin Grayscale has in its GBTC Trust.

Martin Leinweber, a digital asset product strategist at MaretVector Index, commented on the significance of the discount to NAV narrowing year-to-date.

When the discount narrows, it suggests that investors are becoming more confident in the trust or that demand for the shares is increasing. If the discount narrows significantly or disappears completely, it could lead to a substantial return for investors.

the strategist explained.

SEC’s Bitcoin ETF Suspense Continues, However

The SEC can still deny the ETF on other grounds and engage Grayscale in another legal battle if need be.

However, several experts, including Bloomberg Intelligence, believe that SEC Chair Gary Gensler might approve several applications simultaneously. Mike Novogratz, the head of Galaxy Digital, insisted that approval could come before 2024.

NOTE: The legal battle started when the SEC refused Grayscale’s application to convert their closed-end Bitcoin fund (CEF) into an exchange-traded fund (ETF). Grayscale sued the regulator, claiming the denial had no leg to stand on.

Currently, the filings sitting on his desk include investment giant BlackRock, Fidelity, ARK Invest, etc. The SEC has delayed the decision twice already, and the next round of deadlines falls in 2024.