GBTC Shares Skyrocket by 17% Following Favorable Grayscale Court Decision

Grayscale Bitcoin Trust (GBTC) share prices have jumped 17% after the major victory against the US SEC. On Tuesday,  the US Court of Appeals for the District of Columbia Circuit handed Grayscale a win against the Securities and Exchange Commission (SEC) over the matter of converting the Grayscale Bitcoin Trust to a spot Bitcoin ETF. This rally of 17% is the highest for GBTC after July 2021. 

On August 29, GBTC closed at $20.56 after a rally of 17%. The discount of GBTC to the value of the fund’s underlying token holdings has also been lowered to approximately 18%, marking a notable enhancement compared to the nearly 50% discount observed in December. 

Why is an ETF Structure Significant?

Currently, GBTC is operating as a closed-end structure, which makes it susceptible to significant discrepancies from its net asset value (NAV). Shifting towards an ETF structure would facilitate the generation and redemption of shares in line with Net Asset Value (NAV), sparking heightened speculation about a potential decrease in the discount. 

GBTC smash trading records

There has been a substantial rise in the trading activity of GBTC after the recent attention. It has touched the total trading mark of 19 million shares according to a Bloomberg report, which is the highest level in over a year. 

Digital Currency Group, the parent company of Grayscale Investments LLC, Horizon Kinetics LLC, several funds from Morgan Stanley, and the ARK Next Generation Internet ETF are among the major shareholders of the trust. 

Overall, GBTC is surging to reduce its discount, and Coinbase (COIN) is also rising. Bitcoin (BTC) has increased by over 5% due to this news. Many companies, including BlackRock, Fidelity, and Wisdom Tree, have applied for a BTC ETF. Approval for these ETFs is expected in the upcoming months.

Is This it or is there more to the drama?

Grayscale definitely had a significant milestone in the crypto space after the court ruling, but some analysts believe that the SEC might be making moves in the future to stop Grayscale from converting its GBTC product to a spot Bitcoin ETF. Bespoke Investment Group remarked that the impressive surge with substantial trading volume and the positive regulatory news for cryptocurrencies today might provide hope, but they emphasized that it’s crucial to understand that a single day’s movement doesn’t establish a trend.

Does it mean more scrutiny for custodian partners like Coinbase and Binance? With Ripple’s win, one thing is clear SEC has to dig more evidence to pull down Coinbase. It won’t be an easy path for both sides.