SEC Appeals Court Rules for Grayscale Bitcoin Trust Conversion

The SEC Must Review Rejection of Grayscale Bitcoin Trust Conversion, Court Rules

The U.S. appeals court has ruled that the Securities and Exchange Commission (SEC) must review its rejection of the Grayscale Bitcoin Trust (GBTC) conversion into an exchange-traded fund (ETF). This decision has triggered a frenzy of trading, with nearly 20 million GBTC shares changing hands, the highest since the June 2022 crypto market crash. The share price of GBTC surged 18% to almost $21, the highest since mid-July when BTC hit $31,000. The conversion would allow redemptions and close the gap between the fund’s share price and the net value per share of the fund’s BTC holdings. BTC also jumped 7% to $28,000 on the news.

Key Points:

The SEC must review its rejection of the GBTC conversion into an ETF.
GBTC saw its busiest trading session in 14 months.
The share price of GBTC surged 18% to almost $21.
The conversion would allow redemptions and close the gap between the fund’s share price and the net value per share of the fund’s BTC holdings.
BTC jumped 7% to $28,000 on the news.

Profiting from GBTC Discount to BTC Price

The discount between GBTC shares and the net asset value played a key role in last year’s crypto market crashes. When crypto markets rallied, GBTC shares traded at a significant premium. However, when the fund’s shares turned into a discount due to falling crypto prices, some investors suffered losses. Over the last three to six months, some investors have been purchasing GBTC shares, hoping for a narrowing discount in case of a favorable court decision. Now that the discount has collapsed, some are taking profits, while others are buying in hopes of a continued collapse in the premium if the conversion is approved.

Hot Take:

The court ruling requiring the SEC to review the rejection of the GBTC conversion is a significant development for the cryptocurrency market. If the conversion is approved, it could attract a broader range of investors to GBTC and potentially lead to increased adoption of cryptocurrencies. The surge in trading and increase in share price following the ruling demonstrate the market’s enthusiasm for this potential outcome.