Grayscale Bitcoin Trust (GBTC) is approaching its highest levels of 2023 following the filing of a Bitcoin spot price exchange-traded fund (ETF) by BlackRock, the world’s largest asset manager.
The news has generated institutional buying interest in GBTC, the original institutional BTC investment vehicle.
According to data from CoinGlass, on June 17, GBTC came close to reaching new 2023 highs.
This rally comes as Bitcoin market sentiment experienced a modest improvement with the anticipation that BlackRock’s ETF filing could potentially overcome the legal obstacles that have hindered similar ETFs in the United States.
Meanwhile, there are signs of optimism beyond sentiment as GBTC’s long-standing discount to BTC spot prices narrows.
The discount, often referred to as a negative “premium,” is currently at -36.6%, a significant improvement compared to the discount of around -44% observed on June 13. While still discounted, GBTC is trading closer to zero than it has been at almost any other time this year.
Many observers believe that if BlackRock’s ETF is approved, GBTC will be the primary beneficiary. Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, expressed optimism about the prospects of BlackRock’s offering gaining regulatory approval and its potential to resolve GBTC’s discount alongside industry growth.
The BlackRock move has sparked debates as to whether it can be classified as an ETF. Some argue that it will resemble a trust similar to GBTC, while others, including Cochran, believe it qualifies as an ETF under the Securities Act of 1933. Regardless of the classification, investor interest in GBTC is rising in response to BlackRock’s filing.
Hedge fund North Rock Digital announced that it has been consistently accumulating more shares of Grayscale trusts in recent weeks.
It expects significant upside potential if Grayscale wins and minimal downside risk if they lose. Another major holder, ARK Invest, has not yet increased its exposure to GBTC, and data from Cathie’s ARK confirms a gradual decline in their holdings throughout 2023.
Overall, the prospect of BlackRock’s involvement in the cryptocurrency market has stimulated the demand for GBTC and boosted market sentiment.
The narrowing of GBTC’s discount suggests growing confidence among investors, while the debate surrounding the classification of BlackRock’s product highlights the evolving regulatory landscape surrounding cryptocurrency ETFs.
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