Grayscale Bitcoin Trust Aims for ETF Shift to Narrow Discount

Grayscale Bitcoin Trust Aims for ETF Shift to Narrow Discount – Grayscale, a key player in digital asset management, is eager about the possible conversion of its Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF. This transition aims to eradicate the existing 8.09% discount, around $1.89 billion, bringing GBTC’s price more in line with the true value of Bitcoin. 

It promises substantial advantages for investors by aligning GBTC shares more accurately with the actual Bitcoin price and introducing a simplified process for creating or redeeming shares. The details were disclosed by the company’s chief legal officer, Craig Salm, and chief financial officer, Edward McGee. 

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Pending approval from the United States Securities Exchange Commission, GBTC is poised to shift from its current OTCQX platform to the prestigious NYSE Arca exchange. This transition aims to enhance the alignment of GBTC shares with the actual Bitcoin price and facilitate a more straightforward process for investors to effortlessly create or redeem shares.

Bloomberg’s ETF analyst, Eric Balchunas, highlighted the significant reliance on Regulation M (Reg M) relief. While alluding to previous discussions that hinted at the SEC potentially using Reg M to hinder or delay certain processes, Balchunas refrains from confirming this. He points out the interesting timing of Regulation M being brought up right after Grayscale’s meeting with the SEC, suggesting its potential importance or impact in their deliberations.

At the current price of $39,481 for Bitcoin, coupled with increased trading volume indicating heightened trader interest, the potential introduction of a spot Bitcoin ETF offers investors a more accurate reflection of Bitcoin’s value through GBTC. It also provides a secure avenue for institutional investors to participate in Bitcoin. 

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This progress has already resulted in a 3% uptick in Bitcoin’s value over the last 24 hours, accompanied by a noteworthy surge in trading volume, signaling broad interest. On November 28, in a post on X (formerly Twitter), James Seyffart, the Bloomberg ETF analyst, mentioned that the SEC postponed its decision on the applications 34 days before the scheduled decision deadline of January 1, 2024. 

Seyffart and his colleague Eric Balchunas had placed 90% odds on spot Bitcoin ETF approvals by Jan. 10, 2024, and the twin delays “all but confirms for me that this was likely a move to line every applicant up for potential approval by the Jan 10, 2024 deadline,” Seyffart said.

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