Grayscale's GBTC Discount Narrows Amid ETF Optimism: Lowest Since July 2021

In a notable development, Grayscale's Bitcoin Fund (GBTC), recognized as a leading global bitcoin investment entity, has witnessed a reduction in its discount to single digits for the first time since July 2021. This noteworthy occurrence took place on Friday, propelled by the prevailing optimism surrounding the potential approval of a bitcoin spot exchange-traded fund (ETF) in the United States.

GBTC shares experienced a significant decline, reaching a two-year low with an 8.6% discount to the trust's net asset value (NAV) on Friday. This marked the closest proximity to NAV since July 2021, as evidenced by data from Ycharts. The fund has consistently traded at a discount since February 2021, hitting record lows of nearly 50% in December of the same year.

Eric Balchunas, an ETF analyst at Bloomberg, suggested in a social media post on X (formerly Twitter) that the reduction in the discount is likely a response to Grayscale's "updated filings/SEC meeting reported Wed."

$GBTC's discount is in single digits for the first time in over two years, it had been flirting w this barrier for a while and finally broke through 10% Wed night and is curr 8.6%, likely prompted by their updated filings/SEC meeting reported Wed. pic.twitter.com/MPPJDziXgw

— Eric Balchunas (@EricBalchunas) November 24, 2023

Currently, Grayscale is eagerly awaiting a decision from the U.S. Securities and Exchange Commission (SEC) regarding its request to convert the closed-end fund into an ETF. Throughout the week, the company has been in discussions with regulators, providing detailed insights into the trust, fostering a sense of optimism in the market.

Update: New Grayscale S-3/Prospectus #Bitcoin ETF filing to convert $GBTC. Right off the bat the biggest update is the plan to change $GBTC's ticker to $BTC (which was expected). Skimming through the rest now. pic.twitter.com/W9uNdAHLMv

— James Seyffart (@JSeyff) November 22, 2023

A memorandum released by the SEC on Wednesday revealed that Grayscale held a meeting with the SEC to delve into the specifics of the fund it aims to convert into an ETF. The memo clarified, 

“The discussion concerned NYSE Arca, Inc.’s proposed rule change to list and trade shares of the Grayscale Bitcoin Trust (BTC) under NYSE Arca Rule 8.201-E.”

In a positive development, a filing shared by Scott Johnson, a financial lawyer, disclosed that Grayscale has initiated a transfer agency and service agreement with BNY Mellon. This arrangement designates the bank as the agent for GBTC, streamlining the issuance and redemption of shares.

Grayscale making preparations pic.twitter.com/9A87FZK1su

— Scott Johnsson (@SGJohnsson) November 21, 2023

GBTC maintains its position as the largest cryptocurrency fund globally, currently managing assets valued at $30.45 billion as of November 22. The convergence of these factors marks a pivotal moment for Grayscale's Bitcoin Fund, with industry participants closely monitoring the outcome of its ETF conversion endeavor amidst the ever-evolving landscape of cryptocurrency investment.

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