The cryptocurrency market has been witnessing significant developments, with the spotlight on Grayscale Bitcoin Trust (GBTC) and its quest to transform into a spot Bitcoin Exchange-Traded Fund (ETF). Recent events have propelled the discount on GBTC to its narrowest margin since its inception, signaling growing investor confidence and a potential paradigm shift in crypto trading.
Grayscale's Chief Legal Officer, Craig Salm, has been at the forefront of efforts to convert GBTC into a spot ETF, which would allow it to be traded on prominent exchanges like NYSE Arca or Nasdaq. Despite all spot ETF applications being previously rejected by the SEC due to concerns over the market's connection between futures and spot Bitcoin markets, a pivotal court order in October 2023 mandated the SEC to reconsider their stance on Grayscale's application.
This legal advancement coincided with BlackRock (NYSE:BLK)'s foray into the Bitcoin ETF arena in June 2023. The financial giant laid the groundwork for its own Bitcoin ETF, which was listed by the DTCC by late October. This move by BlackRock, combined with the court order, has ignited a wave of optimism within the crypto community.
In response to these optimistic developments, Bitcoin's value soared to an 18-month high of over $37,000 last week. This surge is particularly noteworthy as it coincides with GBTC's discount reaching its lowest point since December 2022, when YCharts data indicated a historical low of -48.89%.
The upward trajectory continued through 2023, with GBTC's premium steadily rising amidst returning investor confidence and a broader recovery in the Bitcoin and crypto markets. As of November 10, 2023, the GBTC premium achieved a two-year high of -10.35%, reflecting an impressive increase of over 150% from its December 2022 low.
This recovery is remarkable considering Grayscale's previous struggles with the SEC, which twice rejected their application to convert GBTC into a Spot ETF in 2022, even as multiple Bitcoin Futures ETFs received approval. The ensuing lawsuit filed by Grayscale against the SEC seems to have borne fruit with last week's reports indicating ongoing negotiations between Grayscale and the SEC. With Salm expressing confidence in an imminent approval, and Grayscale being among 12 applicants for a Spot Bitcoin ETF, market participants are looking ahead with anticipation for potential approvals expected in 2024.
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