Grayscale Bitcoin Trust (GBTC) experienced a surge in its share price to a one-year high on Tuesday, June 27. This was in response to a report that investment asset manager Fidelity Investments was preparing to follow in the footsteps of Blackrock’s application for a Bitcoin exchange-traded fund (ETF) with its own. This renewed optimism regarding converting the trust into an ETF caused GBTC to close at $19.47 on Tuesday afternoon, which is a gain of 7.1% throughout the day. This was the highest closing price since last June, according to TradingView data. Meanwhile, Bitcoin (BTC) was mostly flat, with a brief spike to $31,000 following the Fidelity news.
The discount on GBTC’s share price gauge by its net asset value dropped to 30%, according to a CoinDesk calculation. This is a metric that is widely followed in the digital asset arena. The last time that GBTC closed the day around this level was in last September, based on historic data by Ycharts.
The GBTC price rally had started when BlackRock filed on June 15 and has continued since then. Invesco and WisdomTree had also reapplied to provide spot BTC ETFs, which increases the expectations for GBTC. GBTC has gained almost 50% in less than two weeks since BlackRock’s application. BlackRock, being the world’s largest asset manager that has $9.1 trillion in AUM, has improved the outlook for GBTC.
According to Doug Schwenk, CEO of crypto data provider Digital Asset Research, investors are betting on GBTC because of the “BlackRock filing and optimism that [the firm] may have cracked the code on an ETF, giving hope that Grayscale could also convert and remove the discount.” Schwenk added that traders are increasingly optimistic about the outcome of the lawsuit between Grayscale and the US Securities and Exchange Commission (SEC). The firm sued the agency earlier this year for rejecting its application to convert the closed-end GBTC fund into an ETF that would allow for redemptions and close the difference between the share price trading on secondary markets and the net value per share of the fund’s BTC holdings. A positive outcome for Grayscale would increase the potential for listing as an ETF and eliminate the discount.
Schwenk further said that some investors believe that BlackRock’s filing indicates the potential for success by Grayscale in their lawsuit. As such, with increasing optimism over ETF approval and litigation, GBTC has seen a buoyant price rally.