GBTC’s Discount Rate at 2-Year Low: Is Approval for a Bitcoin ETF Approaching?

• The discount on Grayscale Bitcoin Trust (GBTC) is currently at its lowest level since November 2021, which could indicate growing investor confidence in potential approval for the first time in the United States.
• In terms of direct ETF applications, the Ark 21Shares spot Bitcoin ETF application process is at the forefront of the decision-making process until January 10.
• Low investor sensitivity in the crypto market followed the FTX crash in December 2022, causing a discount rate of -48%.

The discount rate on Grayscale’s Bitcoin Trust fund drops to its lowest level in 2 years: What does the discount on GBTC mean? Is ETF approaching?

GBTC Discount Rate Decreasing: What Does It Mean?

The discount on Grayscale Bitcoin Trust (GBTC) is currently at its lowest level since November 2021, which could indicate growing investor confidence in potential approval for the first time in the United States. The GBTC discount represents the percentage by which GBTC trades above or below the net asset value (Bitcoin BTC price).

Analysts predict a 90% chance of approval for spot Bitcoin ETFs by January 2024, while Grayscale’s application to convert GBTC to a spot ETF also has legal obligations based on the U.S. Securities and Exchange Commission (SEC) case decision.

Among the 12 companies racing for spot Bitcoin ETF approval, experts foresee the possibility of multiple approvals simultaneously to avoid giving a first-mover advantage to a single company.

In terms of direct ETF applications, the Ark 21Shares spot Bitcoin ETF application process is at the forefront of the decision-making process until January 10. However, any developments in the Grayscale case could mean the conversion of GBTC to a spot ETF and approval for a series of ETF applications. With a decision dated August 29, 2023, the District of Columbia Court of Appeals paved the way for Grayscale’s spot ETF approval.

GBTC Discount: What Does It Mean?

The GBTC discount is currently -12.26%, the lowest since November 2021. The FTX crash in December 2022, which caused a discount rate of -48%, led to low investor sensitivity in the crypto market. Therefore, the reduced discount is an indicator of optimism among market participants in an environment where Bitcoin ETF approval is expected. Meanwhile, the Bitcoin price is approximately 120% higher compared to a year ago.