GBTC Share Price Jumps 17% After Grayscale Court Ruling, What’s Next?

On Tuesday, Grayscale registered a major victory against the US SEC over the matter of converting its Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF. Shares of the Grayscale Bitcoin Trust rallied the most of Tuesday, after July 2021.

The GBTC share price rallied by 17% closing at $20.56 on Tuesday, August 29. GBTC has reduced its discount to the value of the fund’s underlying token holdings to around 18%. This is a significant improvement from the nearly 50% discount seen in December.

The Grayscale Bitcoin Trust (GBTC) presently operates as a closed-end structure, making it susceptible to significant discrepancies from its net asset value (NAV). Transitioning into an ETF would enable the creation and redemption of shares to align with NAV, leading to increased speculation about a reduction in the discount.

This renewed attention for GBTC is evident through a substantial rise in trading volume, reaching its highest level in over a year, with over 19 million shares traded, as reported by Bloomberg’s data.

Among the major shareholders of the trust are Digital Currency Group, the parent company of Grayscale Investments LLC, Horizon Kinetics LLC, several funds from Morgan Stanley, and the ARK Next Generation Internet ETF.

Is it Early for GBTC Investors to Party?

Grayscale’s win is certainly a major milestone for the crypto space, however, some analysts believe that the SEC will unleash the next moves to stop Grayscale from converting its GBTC product to a spot Bitcoin ETF. In a note to investors, Bespoke Investment Group wroteBespoke Investment Group wrote:

“Although the swing higher on strong volume has been impressive, and today’s news does provide some hope for crypto on the regulatory front, one day does not make a trend”.

Some analysts note that while the court has rejected the SEC’s previous arguments of rejecting spot Bitcoin ETFs, the federal securities regulatory would now target crypto custodians and their lack of security measures.