Grayscale 'GBTC Discount' Narrows to Near 2-Year Low as SEC Misses ETF Appeal Window

The narrowing of the discount likely represents increased likelihood that Grayscale will be able to convert its close-ended bitcoin trust into a spot-based exchange-traded fund.

AccessTimeIconOct 16, 2023 at 6:42 a.m. UTC
Updated Oct 16, 2023 at 3:46 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The widely tracked crypto market indicator "GBTC discount" narrowed to its lowest in 22 months on Friday, signaling increased optimism that Grayscale will be able to convert its close-ended bitcoin trust into an open-ended spot-based exchange-traded fund (ETF).

On Friday, shares in Grayscale Bitcoin Trust (GBTC) traded at a discount of 15.87% to the trust's net asset value, reaching the level last seen in December 2021, according to YCharts. The discount has been steadily narrowing since reaching a record low of nearly 50% during the height of the bear market in December last year.

The latest improvement came as the U.S. Securities and Exchange Commission (SEC) decided not to appeal against the D.C. Circuit Court of Appeals' August verdict to set aside the regulator's decision to reject Grayscale's attempts to convert its trust into an ETF. The SEC had until Friday midnight to challenge the decision.

Grasycale and CoinDesk are part of the Digital Currency Group.

The SEC could now come up with new reasons to reject Grayscale's bid to cover its trust into an ETF or request an en banc appeal. That said, the probability appears low, considering the regulator has been actively engaging with other spot-ETF applications.

"As far as I know, the SEC did not appeal, which means it now has to reconsider its ruling. It could deny again for different reasons - but the agency is reportedly engaging with other potential issuers, which is unusual. It is starting to feel like it is getting ready to let them list," Noelle Acheson, author of the popular Crypto Is Macro Now newsletter, said in the weekend edition.

Nate Geraci, president of the ETF Store, voiced a similar opinion on X last week, saying the lack of appeal would mean a potential spot ETF launch in January 2024, with Grayscale probably taking the lead over other issuers.

On June 15, the world’s largest fund manager and traditional finance heavyweight, BlackRock filed for a spot bitcoin ETF with the SEC, with Fidelity, Invesco, Valkyrie Investments, WisdomTree, and VanEck following BlackRock's lead in the subsequent days.

A potential approval of a spot-based ETF is widely expected to unlock floodgates to billions of dollars in mainstream money, although Coinbase Institutional expects the flows to materialize over time.

Edited by Parikshit Mishra.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.