The price gap between shares of Grayscale Bitcoin Trust (GBTC) and the trust’s underlying Bitcoin holdings has narrowed to its lowest level in 22 months.
On October 13, 2023, GBTC shares traded at a 15.87% discount to the trust’s net asset value, according to data firm YCharts. This represents the smallest gap since December 2021 and is significantly down from a record discount of nearly 50% last December during the crypto bear market.
This decreasing discount signals growing optimism that Grayscale will receive approval from the U.S. Securities and Exchange Commission (SEC) to transform GBTC into a spot bitcoin exchange-traded fund (ETF).
This market action also comes after the SEC’s decision not to appeal a federal court ruling that overturned the regulator’s previous rejection of Grayscale’s spot ETF application.
In August 2023, Grayscale achieved a significant legal victory against the SEC in its endeavours; the D.C. Circuit Court of Appeals gave the regulator an October 13, 2023 (last Friday) deadline to challenge the August verdict.
By choosing not to appeal, the SEC is now required to reconsider Grayscale’s ETF conversion proposal, potentially offering a new rationale if they reject it again. However, there are reports that the SEC has been in active discussions with other spot ETF applicants, fostering hope for eventual approval.
Several experts share the sentiment that the SEC’s refusal to appeal clears the path for spot ETF launches in early 2024, with Grayscale leading the way.
“It is starting to feel like [the SEC] is getting ready to let them list,” said Noelle Acheson, author of the Crypto Is Macro Now newsletter, in reference to spot bitcoin ETFs.
According to Nate Geraci, President of the ETF store, last week, “No appeal would mean a potential spot ETF launch in January 2024 with Grayscale probably taking the lead over other issuers.”
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