GBTC price increases as likelihood of Bitcoin ETF grows

GBTC price increases as likelihood of Bitcoin ETF grows

The Blockchain Industry: Potential Impact of Bitcoin ETF Approval and Grayscale’s Ethereum Trust

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The recent federal judge’s rulings overturning the SEC’s rejection of Grayscale’s application to convert its Bitcoin Trust (GBTC) into an ETF have sparked excitement in the blockchain industry. This development has increased the likelihood of a spot Bitcoin ETF approval by the SEC, potentially revolutionizing the crypto market.

Growing Investor Interest and Regulatory Shift

The judge’s decision shed light on the SEC’s failure to provide a clear rationale for rejecting Grayscale’s application, hinting at a potential shift in regulatory stance. As a result, analysts and experts now anticipate the approval of a spot Bitcoin ETF by the SEC in the near future, with some speculating it could happen before the end of the year. Bloomberg analysts estimate a 75% chance of a spot Bitcoin ETF approval in 2023.

The narrowing of discounts for Grayscale’s Bitcoin and Ethereum trusts further indicates growing investor interest in these products. Previously, these trusts traded at significant premiums to their net asset values (NAV), but recent months have seen these discounts significantly reduce. This reduction reflects the perception of Grayscale’s trusts as attractive avenues for investing in Bitcoin and Ethereum.

As the discounts narrow further, it is likely to attract more investors to Grayscale’s trusts, potentially driving up share prices. Overall, these developments paint a positive sentiment in the crypto market with growing confidence in Grayscale’s products as viable investment vehicles for digital assets.

Investors now face a crossroads with the possibility of a Bitcoin ETF approval. They need to decide between investing in GBTC and waiting for potential ETF approval, which could eliminate the discount, or taking a chance on Grayscale’s Ethereum Trust (ETHE).

Potential Impact of Bitcoin ETF Approval on the Crypto Market

The potential approval of a spot Bitcoin ETF is a significant milestone for the cryptocurrency industry. It opens up a more conventional avenue for U.S. investors to invest in Bitcoin, potentially leading to a surge in demand and subsequently driving up its price. In the long run, once a Bitcoin ETF is approved, the discount on GBTC is expected to narrow significantly, as open-ended ETFs typically trade close to their Net Asset Value (NAV). This narrowing discount offers potential gains for investors holding GBTC until that point.

Moreover, broader recognition and acceptance of Bitcoin can further contribute to potential gains for investors. This dynamic adds an interesting layer of consideration for investors as they navigate their investment choices in the evolving crypto market.

Grayscale’s Ethereum Trust (ETHE) – A Significant Opportunity

According to Coindesk analyst Alex Tapscott, if a U.S. spot Bitcoin ETF gets approved, there should be little argument for holding up a spot Ether (ETH) ETF. Grayscale has also expressed its plans to convert ETHE and other products into ETFs. In fact, ethereum ETFs launched within weeks of the first Bitcoin ETF in Canada due to a regulated futures market for ETH, enabling market makers to hedge risk while creating and redeeming units.

The potential approval of a Bitcoin ETF is expected to have a similar ripple effect on the approval of an Ether ETF. Grayscale’s Ethereum Trust (ETHE) currently offers a greater arbitrage opportunity due to a higher discount than GBTC. Additionally, ETH markets are less liquid than BTC, meaning the incremental buying from an ETF could have a more significant impact on price. With Ethereum being a leading platform for Web3 development, it also holds better upside potential.

Grayscale’s Victory Over SEC Boosting GBTC Shares

Grayscale’s legal battle with the SEC regarding the conversion of GBTC into a Bitcoin spot ETF ended in their favor. The U.S. Court of Appeals for the District of Columbia Circuit unanimously sided with Grayscale, labeling the SEC’s decision as “arbitrary and capricious.” This ruling invalidated the SEC’s initial denial of Grayscale’s application and set a new precedent in the cryptocurrency investment landscape.

Following the court’s decision, trading activity around GBTC surged as investors anticipated a reduction in its discount relative to Bitcoin’s spot price. GBTC shares rose from $17.58 to a high of $20.56, marking the highest point since Bitcoin’s value reached $31,000 in July 2023. This 17% increase in share price narrowed the discount to net asset value (NAV) from 25% to 17%.

Grayscale’s Bitcoin Trust (GBTC) is a nearly $14 billion market cap product that wields significant influence in the realm of crypto investing. While the fund previously traded at a widening discount to the value of the bitcoin it holds, recent weeks have witnessed a remarkable turnaround, providing rewards for investors.

In conclusion, the potential approval of a spot Bitcoin ETF represents a significant milestone for the blockchain industry. It opens up new possibilities for U.S. investors and could potentially drive up Bitcoin’s price. Investors now have decisions to make regarding Grayscale’s trusts and the impending approval of a Bitcoin ETF. Additionally, Grayscale’s Ethereum Trust (ETHE) presents a compelling opportunity, especially if an Ether ETF follows the Bitcoin ETF approval. With Grayscale’s legal victory over the SEC, the crypto market is buzzing with anticipation and growing confidence in the future of digital assets.

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