- BlackRock’s Bitcoin ETF application in the US has led to a positive sentiment towards Grayscale Bitcoin Trust (GBTC) shares.
- The discount on GBTC shares, which was as high as 50% last year, is steadily decreasing.
- The closed fund system of GBTC shares, which has been criticized for a long time, will become obsolete if the shares are converted into ETFs.
Revival of Grayscale Bitcoin Trust Shares Amidst Bitcoin ETF Application
BlackRock’s Bitcoin ETF Application Boosts GBTC Shares
BlackRock’s recent Bitcoin ETF application in the United States has stirred a positive sentiment among investors, which has reflected positively on Grayscale Bitcoin Trust (GBTC) shares. Over the past year, GBTC shares have seen a significant discount, which is now gradually decreasing.
Declining Discount on GBTC Shares
The GBTC shares, which are purchased at the lowest unit value of Bitcoins held by Grayscale, were previously being sold at a 27.8% discount compared to the spot Bitcoin price. However, as of last week, this discount rate has dropped to 26.7%. It’s worth noting that these shares had gone into a discount of nearly 50% after the Terra LUNA crash last summer and had approached that level again in November and December following the FTX bankruptcy during the recovery period.
End of the Closed Fund System with ETF Approval
The closed fund system, which makes it difficult for the share price to follow the spot price, has been a long-standing criticism of GBTC shares. Investors cannot convert their GBTC shares into cash except for certain periods. This system, which Grayscale has been considering changing, will no longer be valid if the shares are converted into ETFs. Grayscale, which has also been criticized for its high transaction fees, had filed a lawsuit against the SEC last year when its ETF application was not approved.
Meanwhile, some investors are opting for the Bitcoin Strategy ETF product of ProShares instead of Grayscale. This fund follows the future Bitcoin price and was approved by the SEC in October 2021.
