Grayscale Bitcoin Trust’s (GBTC) Discount Narrows to Year Low

Summary: The discount to net asset value (NAV) for Grayscale Bitcoin Trust (GBTC) has decreased since BlackRock's application to launch a spot bitcoin ETF. The discount reached 50% late last year and hovered around 40% for most of 2023. The filing has led to a sharp tightening trend, with the discount now hovering around 27%.

After asset management BlackRock’s (BLK) application to launch a spot bitcoin ETF in the United States, the discount to net asset value (NAV) for the $19 billion+ Grayscale Bitcoin Trust (GBTC) has continued to shrink.

Recent Spot Bitcoin ETF Filing

The discount to NAV peaked at about 50% late last year and hovered around 40% for the majority of 2023 until starting a sharp tightening trend after BlackRock’s mid-June filing with the U.S. SEC. According to Ycharts statistics, it hit a low of 26% last week, the lowest level since May 2022, and is now hovering around 27%.

Investors Optimistic

A number of other industry players, including rival asset management major Fidelity, have followed BlackRock’s lead in registering for a spot bitcoin (BTC) ETF. As a result of these high-profile participants’ actions, investors are optimistic that the SEC will finally greenlight a spot bitcoin ETF after years of denial.

Grayscale Eyes Approval

That has led to increased demand for the deeply discounted GBTC, which Grayscale submitted paperwork to convert to a spot bitcoin ETF over two years ago. Due to the SEC’s rejection of the Grayscale application, the business has filed suit against the regulator; a ruling is due by the end of the third quarter.

All Eyes on SEC

On Monday, Grayscale’s legal team filed an amendment to their complaint, highlighting the SEC’s approval of a leveraged bitcoin futures-based ETF in late June, calling it an “even riskier” product than other permitted bitcoin futures ETFs. While hopes are high that the SEC will approve a spot bitcoin ETF, it may be prudent for investors to be wary.

Pooja Bhargav