GBTC Discount Narrows After BlackRock’s Filing for Spot Bitcoin ETF

The discount on the Grayscale Bitcoin Trust (GBTC) share price to net asset value narrowed Friday, dropping to a near one-month low a day after investment management giant BlackRock filed for a spot bitcoin exchange-traded fund (ETF).

The price of GBTC shares jumped more than 8% over the past 24 hours to near $14, TradingView data shows, outperforming the digital asset the fund holds. Over the same period, bitcoin (BTC) rose 3.5% to $25,800.

The discount is currently at around 40%, according to CoinDesk’s calculations. This is the lowest level since mid-May, down from 44% earlier this week, but still significantly higher than the 35% level it reached earlier this spring, according to YCharts.

Many crypto observers keenly awaited how GBTC’s discount would react to the news about BlackRock, the world’s largest ETF issuer and a mainstay in the traditional finance world, attempting to register a spot BTC ETF with the U.S. Securities and Exchange Commission (SEC). Multiple investment managers, including WisdomTree, VanEck, Ark Investment Management with 21Shares, have tried to register such a product over the past two years, but the U.S. Securities and Exchange Commission (SEC) has rejected all applications, so far.

BlackRock’s application, however, could be a game-changer, analysts have noted, given its clout and track record. The investment firm has won regulators’ approval for ETFs in 575 cases versus a sole denial, Bloomberg senior ETF analyst Eric Balchunas tweeted.

Grayscale – a subsidiary of Digital Currency Group, CoinDesk's parent company – is currently in a legal standoff with the SEC, after the firm appealed the agency’s decision to deny converting its closed-end GBTC fund into an ETF. The so-called “GBTC discount” developed because the fund doesn’t allow redemptions, so investors can only sell their shares on secondary markets.

While crypto markets rallied in the past years, GBTC shares traded at a significant premium to net asset value. Notably, crypto hedge fund Three Arrows Capital made outsized bets to harvest the premium, then spectacularly blew up when the fund’s shares turned into a discount as crypto prices cratered last year.