BlackRock’s Bitcoin (BTC) investment plans appear to have sparked a rally in a well-known institutional investment vehicle in the cryptocurrency. Data from monitoring resource CoinGlass shows that on June 17th, the Grayscale Bitcoin Trust (GBTC) nearly hit new 2023 highs.
GBTC’s “Premium” Stands at below -37%
Late last week, the Bitcoin market saw a slight improvement on news that BlackRock, the world’s largest asset manager, had filed to launch a commercial Bitcoin exchange-traded fund (ETF).
Though not yet available in the U.S., a commercial ETF from an entity as strong as BlackRock should have a better chance of getting out of the legal problem it entails, or so some think.
Meanwhile, signs of optimism beyond sentiment are becoming clearer, with GBTC long trading at a significant discount to the spot price of BTC, which is rising.
According to CoinGlass, that discount, or negative “premium,” used to characterize GBTC stock prices, currently stands at -36.6%.
While there are still deep discounts, GBTC trades closer to zero than at almost any other time this year. On June 13th, for example, the discount was approaching -44%., this is shown in a GBTC premium versus asset holdings versus the BTC/USD pair chart published by CoinGlass.
Adam Cochran, a partner at cash-risk firm Cinneamhain Ventures wrote in part of a comment on Twitter over the weekend that if the Blackrock ETF gets approved, the real winner here is going to be GBTC, that is due because Blackrock will show the way to conversion, and GBTC’s 40%+ discount will settle on the excellent part of industry growth.
Cochran believes that BlackRock’s offering has a “good chance” of winning approval from U.S. regulators as this is a very different structure than other efforts by a non-losing giant. Trust redeemable out of 30 with redemptions (unlike GBTC) + rule change proposal filing. They came to get away with it.
ARK Has yet to Join recent Buyers
BlackRock’s move is already caught up in its own controversy, as market commentators argue over whether it is, in fact, an ETF.
Some argue that it will simply be a trust equivalent to GBTC, while others, including Cochran, take a more distinct view.
Cory Klippsten, CEO of Bitcoin financial services firm Swan summed up that it Can be called an ETF.
1933 Securities Act filing under a Form S-1, not a Form N-1A (like 99% of exchange-traded ETFs), will be exchange-traded and redeemable to the issuer. We’ll have to wait to see if the SEC approves Blackrock’s commercial Bitcoin ETF.
Aside from that, investor interest in GBTC is growing among several investors. Among the avid buyers is hedge fund North Rock Electronic. It has been observed a more steady accumulation of the Grayscale trusts over the past few weeks, according to an announcement made after the BlackRock presentation.
RR (Risk/Reward Ratio) looks very biased at current levels. Up 50% if Grayscale wins, this is what is expected, and a minimum down if it loses. This presentation could be a catalyst to see them adjust to more rational levels.
One of the largest holders that have yet to increase its exposure is ARK Invest, which continues to hold about 5.37 million GBTC shares. Data from Cathie’s ARK – a tracking website dedicated to Cathie Wood, CEO of ARK Spend – confirms that those holdings will gradually decline through 2023, this is shown in an ARK Commit’s holdings in GBTC graphic developed by Cathie’s ARK.
By Marina Meza
