Grayscale Bitcoin Trust Shares Surge to One-Year High as Fidelity Prepares for Bitcoin ETF

The Grayscale Bitcoin Trust (GBTC) experienced a surge in its share price, reaching a one-year high on Tuesday. This sudden increase was driven by reports that Fidelity Investments, an investment asset manager, was preparing to file for a spot bitcoin exchange-traded fund (ETF), following in the footsteps of BlackRock’s application. Along with the renewed optimism about converting the trust into an ETF, GBTC closed at $19.47 on Tuesday afternoon, gaining 7.1% throughout the day. This was the highest closing price since last June, according to TradingView data.

Although BTC traded mostly flat, there was a brief spike to $31,000 following the Fidelity news. The discount on the GBTC’s share price relative to its net asset value also dropped to 30%, which is a widely followed metric in the digital asset space. According to a CoinDesk calculation, the last time the GBTC closed the day around this level was last September, according to historic data by Ycharts.

Tuesday’s price surge was an extension of GBTC’s recent rally, which was initially spurred by BlackRock’s filing on June 15. This continued after financial services giants Invesco and WisdomTree reapplied to offer spot BTC ETFs. GBTC has gained almost 50% in less than two weeks since BlackRock’s application. For context, BlackRock is the world’s largest asset manager with $9.1 trillion in AUM.

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,” Doug Schwenk, CEO of crypto data provider Digital Asset Research, said in a note to CoinDesk. Traders are also increasingly optimistic about the outcome of a lawsuit between Grayscale and the U.S. Securities and Exchange Commission (SEC), Schwenk said. The firm sued the agency earlier this year for denying its application to convert the closed-end GBTC fund into an ETF that would allow redemptions and close the gap 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 lead to greater potential for listing as an ETF and removing the discount,” he added. “Of course, some believe that BlackRock’s filing is also a view on the potential for Grayscale to have success in their lawsuit.”

As the cryptocurrency market matures, liquid trading options attract more institutional players and market-based financial products like ETFs, which may help mitigate the volatility of the market. Market makers providing liquidity can help make investing in cryptocurrencies more efficient, potentially tightening spreads and increasing trading volume. It appears Grayscale’s investors are banking on something similar happening soon.