Grayscale's GBTC Discount Approaching 2-Year Low: Potential SEC Approval of All ETFs Threatens First Mover Advantage

Grayscale Bitcoin Trust Discount Hits Lowest Point Since November 2021

You may have noticed that the Grayscale Bitcoin Trust (GBTC) discount is currently at 12.26%, its lowest level since November 2021. This could be an indication of growing confidence among investors in the potential approval of the first-ever spot Bitcoin ETF in the United States. The GBTC discount represents the percentage by which GBTC is trading above or below its net asset value (NAV), which is tied to the price of Bitcoin (BTC).

The SEC has entered into negotiations with Grayscale Investments over the details of the company’s application to convert its trust product GBTC into a spot Bitcoin ETF. All parties are currently actively advancing the application process. The SEC declined to comment on this new…

— Wu Blockchain (@WuBlockchain) November 9, 2023

GrayScale’s Discounted Stance

The news that the SEC has begun talks with Grayscale about converting GBTC into an ETF has captured the attention of the industry. Following their recent legal victory, Grayscale has been engaged in discussions with key divisions within the SEC. Craig Salm, Grayscale’s CLO, has emphasized their focus on constructive engagement and expressed confidence that it’s a matter of “when, not if.” Other contenders like BlackRock and Fidelity are also making progress in their registration negotiations with the SEC.

This drop in the GBTC discount percentage reflects increased market optimism driven by expectations of a Bitcoin ETF approval and a significant increase in Bitcoin’s price compared to a year ago.

GBTC’s discount to NAV (the underlying Bitcoin) is now the lowest that it’s been since November 2021 — currently at 12%.

Looks like the market is pricing in very high probability of BTC ETF approval at this point.

— Will (@WClementeIII) November 8, 2023

Grayscale GBTC Conversion Is Heading To BTC Boom, If

The recent SEC lawsuit judgment makes Grayscale’s filing to convert GBTC into a spot Bitcoin ETF legally binding. Analysts predict a high chance of approval by January 2024. With multiple companies seeking spot Bitcoin ETF approval, there’s an expectation that they will be approved simultaneously to avoid giving one company a first-mover advantage.

The US SEC must decide on the Ark 21Shares spot Bitcoin ETF by January 10. The approval of Grayscale’s spot ETF could lead to further filings for other ETFs as well.

GBTC Discount: Is it Worth Waiting?

The current GBTC discount stands at -12.26%, its lowest level since November 2021, compared to a much more significant -48% discount in December 2022 following the FTX collapse. This decrease reflects growing optimism among market participants, driven by expectations of a Bitcoin ETF approval and an increase in Bitcoin’s price compared to a year ago.

Hot Take: Growing Optimism Surrounding Grayscale’s GBTC Discount

The decreasing discount on Grayscale’s Bitcoin Trust (GBTC) signals rising confidence in potential approval for a spot Bitcoin ETF in the US. As investors eagerly await regulatory decisions and discussions with key players like Grayscale and other contenders like BlackRock and Fidelity continue, there is growing anticipation for major shifts in the cryptocurrency landscape.