GBTC stock is approaching parity with Bitcoin (BTC). The discount fell to a two-year low. Grayscale is in active negotiations with the SEC.
GBTC is the world’s largest cryptocurrency fund, currently with $30.45 billion in assets under management as of November 22. It is approaching parity with BTC as negotiations between Grayscale and the US Securities and Exchange Commission (SEC) are in full swing.
GBTC shares fell to a two-year record of an 8.6% discount to the trust’s net asset value (NAV) on Friday, the closest it has traded to NAV since July 2021, according to Ycharts data. The fund has been trading at a discount since February 2021 and hit record lows of nearly 50% in December last year.
Shares of Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin fund, have almost returned to parity with the price of BTC. Its rising value reflects market confidence that Grayscale’s efforts to transform the fund into a spot Bitcoin ETF will succeed.
GBTC: Successful Negotiations with the SEC
Since Nov. 22, GBTC’s discount rate to net asset value has fallen to 8.6%, according to Bloomberg ETF analyst Eric Balchunas. The discount reflects the difference between the market value of GBTC shares and the total value of all BTC held by the trust.
According to the latest data from Grayscale’s website, the fund has $33.75 worth of BTC per share, compared to the market price of $31.21. Thus, at the end of the week the discount is only 7.5%.
According to Balchunas, the reduction was due to an update to the report and a meeting of the Securities and Exchange Commission. Separate SEC filings show that Grayscale executives.
Grayscale is currently awaiting a decision from the U.S. Securities and Exchange Commission (SEC) on whether it can convert the closed-end fund into an ETF and has reportedly had talks with regulators this week about the details of the trust, generating optimism.
BlackRock and other companies met with the SEC’s Division of Trading and Markets on Monday to discuss their ETF applications. The discussion was apparently about how fund managers would buy back shares from the trusts for the underlying BTC in cases where the shares began trading at a premium or discount to their net asset value.
According to a document shared by Scott Johnson, a financial lawyer, Grayscale signed a service and transfer agency agreement with BNY Melon, in which the bank will act as an agent for GBTC, facilitating the issuance and redemption of shares.
While companies like BlackRock are pushing for an in-kind buyback model. Therefore, the SEC wants to use a cash buyback model that does not require issuers to handle BTC directly.
Big investors like Cathie Wood and Mike Novogratz, who manage funds that sponsor individual ETF applications. They have seen greater SEC involvement in products before they hit the market.
Growing Confidence in GBTC
All of these trends are increasing investor confidence that the regulator can finally approve the conversion of a trust into an ETF. The launch of the tool is expected to not only attract large institutional flows into BTC, but also immediately reset the value of GBTC shares to the value of BTC they represent.
This is an attractive prospect for early GBTC investors who, by investing in the fund before its conversion, will benefit from both assets. In December 2022, GBTC shares were trading at a significant discount of 48%, on the underlying asset at only 8 dollars per share.
By Leonardo Perez
