• Grayscale Bitcoin Trust (GBTC)’s share price has surged 25% since BlackRock filed for spot Bitcoin ETF.
• The discount on its BTC holdings dropped to 37%, as investors are more confident of conversion into an ETF.
• If BlackRock’s fund is approved, it would compete with GBTC and potentially reduce its premium.
Grayscale Bitcoin Trust (GBTC) Rockets 25% in a Week
Grayscale’s GBTC stock price has rallied 25% ever since BlackRock submitted its application for spot Bitcoin ETF. This sent the share price of Grayscale Bitcoin Trust (GBTC) soaring by 27%. During Tuesday’s trading session on June 20, the GBTC share price gained 11.40%, reaching a single-day trading volume of $10.24 million, since November 2022.
Discount on BTC Holdings Dropped to 37%
The current recovery in the GBTC stock has caused the discount on its underlying BTC holdings to drop to 34%, from 44% a week before. Investors believe there is now a higher chance of Grayscale successfully converting it into an ETF due to competition from BlackRock’s fund if approved by the US Securities and Exchange Commission (SEC).
SEC Crackdown & Traditional Financial Players‘ Involvement
Despite the SEC crackdown in recent times, big players from traditional financial markets are launching their own spot Bitcoin ETF products, such as BlackRock’s application which sparked a surge in GBTC stock prices. Bloomberg Intelligence analysts Eric Balchunas and James Seyffart wrote that “BlackRock likely didn’t make the decision lightly and is used to working with regulators and the government at large.“
Grayscale vs SEC
In past attempts, Grayscale Investments have requested permission from the SEC to convert GBTC into a spot Bitcoin ETF but it was denied due to concerns over lack of consumer protection and other risks despite taking all necessary measures as requested by regulators.
If BlackRock’s fund is approved, it could step up competition in the market putting pressure on Grayscale’s valuations while increasing investor protection which could be beneficial for traders interested in cryptocurrencies who otherwise may have been hesitant due to potential manipulation or other risks associated with cryptocurrency trading or investing.