Last week, $9.5 trillion asset manager BlackRock made a seismic move by applying to the U.S. Securities and Exchange Commission (SEC) for a Bitcoin exchange-traded fund (ETF). The ripple effects of the traditional finance titan have, apparently, propped up investor sentiment and sent Grayscale’s Bitcoin Trust (GBTC) flying.
GBTC jumped more than 12% on the news before markets closed on Friday, with share prices reaching $15.12, according to Yahoo Finance. U.S. markets were closed on Monday in observance of Juneteenth, a federal holiday commemorating the day word reached Texas that enslaved people had been emancipated.
Grayscale’s flagship product, GBTC, enables investors to trade shares in trusts that hold pools of Bitcoin, with each share meant to track the current price of Bitcoin; the idea is that investors can gain exposure to Bitcoin without having to actually buy and hold the asset itself.
The so-called “GBTC Discount,” hit a monthly low of -36.61% according to YCharts, with bitcoin trading at $26,436, as per information from Coingecko. The discount refers to the difference between the price fo the shares and the net asset value (NAV) of GBTC’s Bitcoin holdings.
Grayscale, a subsidiary of Digital Currency Group (DCG), has been filing for a spot Bitcoin ETF for years–as have several other companies. The company first filed an application back in 2016, withdrawing it a year later.
“We believed the regulatory environment for digital assets had not advanced to the point where such a product could successfully be brought to market,” Grayscale said at the time.
They applied again in 2021, only to be turned down by regulators due to what authorities deemed “a market prone to manipulation.” The repeated rejection of its ETF application led Grayscale to initiate legal actions against the SEC last year. The court case reached a pivotal moment in March this year, after judges questioned the agency’s decision-making.
Investors seem to be feeling bullish today, however. Although the long and extenuating legal battle with the SEC seems endless, BlackRock’s impeccable track record for ETF applications (currently at 575-1) has injected a breath of fresh air into GBTC.
The SEC has been relentless in its “anti-crypto” stance, suing several big name industry players in the past weeks. SEC Chair Gary Gensler, known for having taught a Bitcoin and Blockchain course at MIT, has been a staunch adversary for the cryptocurrency space.