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GBTC: Volume frenzy could erase discount by 2024 

During the day, over 20 million GBTC shares were exchanged, making it the most since June 2022.

Grayscale Bitcoin Trust (GBTC) rose quickly yesterday following news that the investment firm had an historic win against the US Securities and Exchange Commission (SEC) concerning its spot Bitcoin ETF application. 

New data says that GBTC premium may soon return. 

GBTC surged on court victory 

Grayscale Investments court win propelled the firm to its largest trading session in 14 months. 

During the day, over 20 million GBTC shares were exchanged, making it the most since June 2022. The price rose to close to $21, the highest since Bitcoin reached $31,000 in mid-July. 

There were remarkable liquidations totaling $172 million, with short liquidations accounting for a significant 68.6% of the total, or over $118 million. On the other hand, long liquidations made up $54 million of the total liquidation amount.

Since the news, GBTC discount has rapidly compressed to 18%, its lowest levels in the last 2 years. 

The investment firm has maintained that the SEC was unfair in its rejection of its application to convert GBTC into an spot Bitcoin ETF after it had approved a Bitcoin futures ETF. SEC said the rejection was based on the possibility of market manipulation and potential fraud. 

The court said that there was uneven treatment of the ETFs and it didn’t see good reason for the rejection. 

“The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP,” the court said, referring to exchange-traded products. “In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.”

Read more: Bitcoin jumps to $28K following Grayscale ETF victory—time for a bull run?

Discount may soon disappear

The GBTC fund has over 600,000 BTC (or around $17.1B) in its coffers. All this has traded at a discount to the Bitcoin spot price, also net value asset, since February 2021. 

However, per data from Coinglass shows that GBTC’s discount has contracted to 18%, marking its lowest level since December 2021. 

Thus, the “GBTC premium” has been negative for more than two and a half years, but that may soon change At the current gain rate, the discount may be gone by 2024. 

Grayscale discount | Source: Coinglass.

It is now only -17% of what it was at its apex, when it was close to 50%, in what was previously referred to as a “elevator to hell.”

Dylan LeClair, senior analyst at digital asset fund UTXO Management noted the impact the GBTC fund had on shaping Bitcoin bull run. 

“Don’t forget how large $GBTC is. They hold >600k BTC, and was the single largest driver of the 2021 bull run from a flows standpoint,” he told X subscribers on Aug. 29,” he said. “Today’s discount move from -26% to -17% is the equivalent of 56,000 BTC returning to the AUM of $GBTC if shares are marked to market.”

Grayscale CEO Michael Sonnenshein said that the legal win brought the first “one step closer to making a U.S. spot Bitcoin ETF a reality.”

Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.

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