SEC No-Appeal Decision Increases ETF Turnaround Chances for Grayscale Bitcoin Trust (GBTC)
Recent reports indicate that the US Securities and Exchange Commission (SEC) has opted not to appeal Greyscale's decision, while Bloomberg ETF analyst James Seifert weighed in on the matter, speculating that Bitcoin ETF approvals are now highly likely, in an October 13 post titled “A Done Deal.”
In a significant development, the SEC has chosen to challenge the court's decision to reject Greyscale's request to convert a bitcoin trust into a more accessible exchange-traded fund (ETF). The SEC had until midnight on Friday to challenge the court's decision. However, the SEC allowed this deadline to pass without pursuing an appeal. In response to this news, Bitcoin (BTC) experienced a significant rally above $27,000, currently trading around $27,950.
On Oct. 15, Grayscale confirmed that the SEC's 45-day window to question the practice had passed. As such, the court is set to issue “final jurisdiction” within the next seven calendar days.
Greyscale has reiterated its readiness to convert the Greyscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF) upon receiving approval from the SEC. They said, “Greyscale team is ready to convert GBTC to ETF upon SEC approval, and we look forward to sharing more information as soon as possible.”
This development marks a significant shift in the regulatory landscape, creating the prospect of a more accessible investment vehicle for Bitcoin through ETFs.
Greyscale's ETF Conversion: A New Chapter in Crypto Investment Access
In August, the D.C. Circuit Court of Appeals declared the SEC's refusal to convert the Grayscale Bitcoin Trust (GBTC) into an ETF, describing it as “arbitrary and capricious.” The Court stressed that federal agencies must deal with similar cases consistently.
This decision created an atmosphere of anticipation in the cryptocurrency community, which has been eagerly awaiting the SEC's response. Now the SEC has reportedly decided not to appeal this decision. Although the SEC has not officially confirmed this, market observers have taken it as a major development that could pave the way for the first Bitcoin ETF in the United States.
Greyscale Investments is ready for this transition and has expressed its readiness to convert GBTC into an ETF after receiving SEC approval. The speculation surrounding this move is the hope of eliminating the ongoing discount between the fund's value and bitcoin holdings, which has been a long-standing issue.
Grayscale Bitcoin Trust (GBTC) sees a narrowing decline amid Spot Bitcoin ETF expectations
Greyscale's Bitcoin investment vehicle, Greyscale Bitcoin Trust (GBTC), has experienced a significant decline in its Bitcoin net asset value (NAV), indicating that market sentiment may be changing. As of October 13, data from YCharts shows that GBTC's discount to NAV is 15.87%, the lowest level in two years.
Net asset value discount is an important measure of how much a mutual fund or ETF is trading below its fair value. This information is important for investors to assess how well the security's value is relative to its underlying assets.
GBTC's decline began to narrow around mid-June, which coincided with the filing of Bitcoin ETF applications by major financial institutions, including BlackRock. From June 15, when the discount was at 44%, on July 5 it was reduced to 26.7%. Since then, this trend has continued.
The last time GBTC dropped to the same level was in early December 2021, shortly after Bitcoin hit an all-time high of $69,000 on November 10.
Market watchers such as Bitcoin activist Oliver Velez suggest that the narrowing discount will await the approval of the Bitcoin ETF by the end of the year. Other analysts, including cryptocurrency investor Lyle Pratt, expect GBTC's decline to slow further in the next week or two as the position of bitcoin ETFs nears approval.
While the exact course of action the SEC will take is uncertain, Grayscale and the cryptocurrency community are watching closely to see how this new phase of crypto investment access plays out. For now, the cryptocurrency investment community is eagerly awaiting the expected “final order” from the court, which will probably set the tone for this great development.
