GBTC Discount Continues to Shrink as Bitcoin ETFs Move Closer to Reality

Grayscale Bitcoin Trust (GBTC) – the world’s largest Bitcoin fund – reached its lowest point in 22 months last Friday. The decline in the discount has sparked optimism as spot Bitcoin exchange-traded funds (ETFs) in the United States are moving closer to becoming a reality.

This comes as the SEC passed the deadline to appeal against Grayscale’s attempt to convert its GBTC fund into a spot bitcoin ETF.

Grayscale Bitcoin Trust Discount Sees 16% Decline

According to the latest data by YCharts, Grayscale Bitcoin Trust (GBTC) shares were traded at a 15.87% discount on October 13th, compared to the trust’s net asset value (NAV), a level not seen since December 2021, only a month after Bitcoin’s price peaked near $69,000.

In fact, the discount on GBTC started to decrease when BlackRock and several other financial institutions submitted applications for spot Bitcoin ETFs around mid-June. The discount, which was at 44% on June 15, reduced to 26.7% in a span of just three weeks, and it has continued to narrow since then.

The “Discount to NAV” is a percentage that gauges the extent to which a mutual fund or ETF is trading at a value lower than its net asset value (NAV). This metric serves as a means to monitor the deviation at which a security is trading in relation to its actual intrinsic worth.

The data depicts that this discount has been consistently narrowing since it hit a record low of almost 50% during the depths of the bear market in December of the previous year.

When Spot Bitcoin ETF?

The US Securities and Exchange Commission (SEC) had until October 13th to appeal its dispute with Grayscale Investments over establishing a spot Bitcoin ETF. While a failure to appeal does not mean the regulator is ready to approve one.

Now that the deadline has expired, it is probable that the court will reaffirm its directive for the SEC to reassess Grayscale’s request to transform its GBTC product into a spot Bitcoin ETF. However, the financial regulator might still come up with alternative grounds for denial.

However, industry observers are optimistic about a potential approval. Bloomberg ETF analysts also increased the odds of approval to 90% after Ark Invest and 21Shares updated its spot Bitcoin ETF prospectus requested by the SEC.