Grayscale’s Victory Overturns GBTC Downturn
Grayscale achieved a significant triumph over the U.S. SEC (Securities and Exchange Commission) on Tuesday concerning the transformation of its Grayscale Bitcoin Trust (GBTC) into a BTC ETF (Exchange Traded Fund).
As a result of this victory, the value of GBTC shares surged by nearly 17%. On Tuesday, the GBTC shares reached a price of $20.56, substantially reducing their deviation from the actual asset value to 18.06%. In comparison, the discount was much steeper at around 50% back in December 2022.
This rally marked the most substantial increase for this asset since July 2021. Based on data from YCharts, the present discount is at its lowest since late December 2021.
The discount between GBTC and BTC was a key factor in the downfall of several companies the previous year. During previous bullish market phases, GBTC was traded at a premium compared to its underlying net asset value.
Three Arrows Capital (3AC) took significant positions based on this premium, but it proved detrimental as the share price transitioned into a discount in 2022 due to declining cryptocurrency prices. Following the collapse of FTX in November 2022, the discount widened to as much as 45%.
Grayscale’s successful outcome against the SEC has uplifted investor morale, with positive impacts extending to the cryptocurrency markets. According to daily charts, Bitcoin (BTC) has surged by 5.5%, exceeding the $27,000 threshold. Concurrently, the global cryptocurrency market capitalization has increased by 4.2%, currently standing at $1.14 trillion.
The U.S. SEC has faced defeats in two significant legal battles against cryptocurrency companies. The first pertains to its partial loss in the case involving Ripple, and the second is represented by Grayscale’s victory on Tuesday.
The SEC is expected to make determinations on seven distinct ETF applications during the initial week of September. However, the regulatory body has already consecutively postponed its rulings on applications from 21Shares and ARK. Some observers attribute the recent slowdown in the markets to this regulatory delay, which occurred earlier this month.
There is a strong possibility that the SEC might also extend its decision-making process for the upcoming application deadlines. Considering its consecutive defeats, it is feasible that the SEC is facing uncertainties in relation to the cryptocurrency industry.
Consequently, it is plausible that the agency’s decision might not emerge until early 2024. At the time of reporting, GBTC shares were being traded at $20.56, while Bitcoin (BTC) was valued at $27,437.