Bitcoin’s value is on the rise, nearing $28,000 as of Monday, following a 4.5% surge during Asian trading hours. The increase in the cryptocurrency’s value was driven by heightened expectations of a Bitcoin exchange-traded fund (ETF) approval by the United States Securities and Exchange Commission (SEC) in the coming weeks1.
Several Bitcoin ETF applications are currently under review by the SEC, which has until mid-November to make a decision. The most anticipated one is the VanEck Bitcoin Strategy ETF, which is based on Bitcoin futures contracts and has a deadline of Oct. 181.
Investors are hopeful that the SEC will approve at least one Bitcoin ETF this year, as it would provide a more convenient and regulated way to access the crypto market. A Bitcoin ETF would also boost the demand and liquidity for Bitcoin, as well as its legitimacy and adoption among institutional and retail investors1.
SEC reportedly won’t appeal court decision on Grayscale Bitcoin ETF
The SEC reportedly has no plans to appeal the recent court decision that favored Grayscale Investments. The ruling requires the SEC to approve or deny Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF within 75 days2.
GBTC is the largest Bitcoin investment vehicle in the world, with over $40 billion in assets under management. However, it has been trading at a significant discount to its net asset value (NAV) for most of this year, meaning that investors are paying less for GBTC shares than the actual value of the underlying Bitcoin2.
Grayscale has been seeking to convert GBTC into a Bitcoin ETF since 2016, but has faced regulatory hurdles and delays from the SEC. The court decision, which was issued on Sept. 30, was a result of a lawsuit filed by Grayscale against the SEC for failing to act on its application within a reasonable time frame2.
If Grayscale succeeds in converting GBTC into a Bitcoin ETF, it would likely eliminate the discount and attract more investors to its product. It would also create more competition in the Bitcoin ETF space, as GBTC already has a large and loyal customer base2.
Grayscale GBTC discount falls to 16% as markets bet on Bitcoin ETF approval
Grayscale’s GBTC discount has fallen to its lowest level in nearly two years, as spot Bitcoin ETFs continue to inch toward approval in the US. The discount, which measures the difference between GBTC’s share price and its NAV, dropped to 16% on Oct. 13, according to data from YCharts3.
The GBTC discount has been narrowing since late September, when it reached a record high of 23%. This indicates that investors are becoming more optimistic about GBTC’s prospects of becoming a Bitcoin ETF, or at least benefiting from the launch of other Bitcoin ETFs in the market3.
A spot Bitcoin ETF would track the price of Bitcoin directly, rather than using futures contracts or other derivatives. This would provide a more accurate and cost-effective way to invest in Bitcoin, as well as avoid the risks and complexities associated with futures trading3.
Several spot Bitcoin ETF applications are pending before the SEC, including those from Valkyrie Investments, WisdomTree Investments, and Kryptoin Investment Advisors. However, the SEC has not yet approved any spot Bitcoin ETFs in the US, unlike Canada and Europe, where they are already available3.