Grayscale Bitcoin Trust Approaches 2023 Highs Amid BlackRock ETF Filing and Increased Buyer Interest

BlackRock’s announcement of its Bitcoin plans has had a significant impact on the Grayscale Bitcoin Trust (GBTC). Recent data from CoinGlass reveals that on June 17, GBTC reached new highs for 2023.

The market sentiment towards Bitcoin experienced a slight improvement when news broke that BlackRock, the largest asset manager globally, had filed for a Bitcoin spot price exchange-traded fund (ETF). While spot ETFs are not yet permitted in the United States, many believe that BlackRock’s reputable standing could help overcome regulatory obstacles.

As a result, signs of optimism have emerged beyond mere sentiment. GBTC, which has been consistently trading at a substantial discount to the BTC spot price, is now trending upwards. According to CoinGlass, the negative “premium” associated with GBTC’s share prices currently stands at -36.6%. Although the discount remains significant, it is closer to zero than it has been throughout most of the year, indicating a positive development. For instance, on June 13, the discount was around -44%.

Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, expressed on Twitter that if BlackRock’s ETF is approved, GBTC will be the true beneficiary. Cochran believes that BlackRock’s offering will pave the way for conversion and resolve GBTC’s discount of over 40% on top of industry growth. He expressed confidence in the likelihood of BlackRock’s ETF gaining regulatory approval, citing its distinct structure and proposed rule change filing.

However, BlackRock’s move has not been without controversy, with market commentators debating whether it qualifies as an ETF. While some argue that it resembles GBTC as a trust, others, including Cochran, take a more nuanced view. Cory Klippsten, CEO of Bitcoin financial services firm Swan, emphasized that it is acceptable to classify it as an ETF based on the filing under the Securities Act of 1933 (Form S-1) rather than the more common Form N-1A used by the majority of stock ETFs. Klippsten highlighted the redeemability to the issuer and the ability to trade on an exchange as significant advantages over GBTC.

Nevertheless, investor interest in GBTC has surged due to BlackRock’s announcement. Hedge fund North Rock Digital disclosed its ongoing accumulation of Grayscale trusts in recent weeks. They anticipate a substantial upside if Grayscale succeeds and minimal downside if they face defeat, viewing BlackRock’s filing as a catalyst for a more rational pricing of the trusts.

Notably, ARK Invest has not increased its exposure to GBTC and continues to hold approximately 5.37 million GBTC shares. Data from Cathie’s ARK, a tracking website dedicated to Cathie Wood, the CEO of ARK Invest, confirms a gradual decline in their holdings throughout 2023.

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