After Grayscale’s legal victory against the US Securities and Exchange Commission (SEC), the trading volumes of GBTC, its flagship crypto product, saw a significant increase on Tuesday.
The DC Circuit of Appeals granted Grayscale’s request to review the SEC’s rejection of its plan to turn GBTC into a spot bitcoin ETF. This decision revived hopes for the approval of a spot bitcoin ETF.
As a result, Grayscale’s Bitcoin Trust (GBTC) rose by nearly 17% in secondary trading, reaching $20.56, and by 7.18% in Grayscale’s holdings per share calculation to $25.09. The total assets went up from $16.2 billion to $17.4 billion.
This surge in GBTC trading marked the highest volume trading day in terms of value since June 21, 2022.
The news also drew attention back to the attempts by major asset managers like BlackRock and Fidelity to launch their own spot bitcoin ETFs. Traders and market participants seemed more optimistic about the approval chances of these applications due to Grayscale’s positive outcome. They also examined what approvals could mean for bitcoin liquidity and adoption by both institutional and retail investors.
Galaxy Digital’s Paul Cappelli referred to the court’s decision as a “watershed moment for the space,” noting that ETFs are fundamental products that have driven trading for commodities like gold and oil. He emphasized the desire of investors to have access to such products.
Bitcoin (BTC) saw a roughly 7% increase in its price throughout the day, closing in New York with a short-term rise.
Assets Increasing
By Tuesday’s close, it was anticipated that GBTC would continue to reduce its discount compared to its net asset value (NAV).
On Monday, the Bitcoin trust was traded on secondary markets at $17.58 per share, while Grayscale valued it at $23.41 per share. This trust has consistently traded below its NAV since Grayscale’s legal action against the SEC in June 2022. The lawsuit was in response to the SEC preventing the conversion of GBTC to an ETF.
Hashflow’s general counsel, Rahsan Boykin, found the court ruling intriguing. He noted that the judge’s breakdown of the SEC’s argument seemed stern in tone.
Grayscale had sought an ETF status to allow redemption of GBTC shares, where ETF arbitrageurs could help restore the product’s value to its NAV once redemptions began.
Grayscale’s CEO, Michael Sonnenshein, emphasized the company’s commitment to adhering to US financial rules and regulations and providing transparent, regulated access to cryptocurrency.
According to Paul Cappelli, if Grayscale’s efforts succeed, the broader bitcoin and crypto markets could respond positively. He mentioned that the event hasn’t been fully accounted for in market prices yet. Cappelli also suggested that there might be a bit of initial market volatility, but this development signals a potential increase in interest in bitcoin.
Cappelli reminded that this is just one step in the process, even though it’s a significant one that offers clarity. He mentioned that it will still take some time before a spot ETF becomes available in the market.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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