Grayscale Bitcoin Trust (GBTC) Nears Conversion to Spot Bitcoin ETF

Grayscale Bitcoin Trust (GBTC), the largest Bitcoin (BTC) fund in the world, has experienced its lowest discount level since April 2021, before an anticipated conversion to a spot bitcoin exchange-traded fund (ETF).

According to available data, the discount reached a minimum of 5.6% on Monday, the lowest since June 2021. Since its inception in February 2021, the fund has been priced at a discount, which peaked at almost 50% in December 2022.

However, anticipations of an ETF approval and increased Bitcoin sentiment have gradually reduced the discount.

Monday’s close price was $39. As of Tuesday, each GBTC share is valued at $41.86 in bitcoin. The trust lacks an inherent market mechanism to ensure that the price of GBTC shares remains relatively close to the intrinsic value of Bitcoin.

This allows traders to exploit premiums and discounts as components of their trading strategies.

As of Tuesday, GBTC has emerged as a viable alternative for U.S. stock speculators seeking to track bitcoin price fluctuations without actually purchasing the cryptocurrency.

The premium may indicate demand for bitcoin, whereas the discount may indicate a declining interest in bitcoin among speculators, which could be interpreted as a bearish indicator.

In the interim, Grayscale is awaiting the U.S. Securities and Exchange Commission’s (SEC) decision regarding the uplistment of the trust as an ETF, in addition to twelve other participants.

As part of its proposed upgrade to a spot bitcoin ETF, Grayscale has reduced its 2% management fee to 1.5%, according to an updated S3 filing published on Monday. AUM of over $27 billion is under its management.

If approved, it will be the most expensive offering for investors. BlackRock and other potential issuers plan to offer their Bitcoin ETFs at a minimum of 0.20% and an increase of 0.30%.

Bitwise, a crypto-native fund manager, charges the lowest of the three, 0.24 percent, after six months of no fees.