GBTC Share Price Soars, Discount Narrows to Multi-Month Low on BlackRock ETF Filing Optimism

Grayscale Bitcoin Trust’s (GBTC) share price continued to soar on Tuesday morning amid optimism about converting the fund into an exchange-traded fund (ETF) after investment management firm BlackRock filed for a spot bitcoin (BTC) ETF.

The price of GBTC shares on secondary markets rose past $16 for the first time since May 10, according to TradingView data. It is currently trading at around $15.9, gaining some 24% since Thursday, the day of BlackRock's filing.

The discount on GBTC’s share price relative to net asset value narrowed to as low as 33% during the morning, according to CoinDesk’s calculation. This is the lowest level since last September, and lower than the 34% it recorded in early March.

The surge came as investors turned optimistic about being able to redeem funds in the future, and Grayscale potentially winning an on-going lawsuit against the U.S. Securities and Exchange Commission (SEC) about converting the fund into an ETF after news about BlackRock’s filing for an ETF. GBTC doesn’t allow redemptions at the moment, which led to a price discount.

“Many are taking BlackRock's conviction as a sign that they expect Grayscale to win its case against the SEC, and want to be in with an ETF filing should that happen,” macro analyst Noelle Acheson said in a note.

“While this doesn't mean that GBTC could convert into an ETF right away if Grayscale does win (it depends on whether Gensler pulls out more tools in his box to fight it), it certainly makes it more likely that GBTC holders would be able to redeem in the near future.”

"The discounts have also narrowed further as GBTC's liquidity remains low," Vetle Lunde, analyst at digital asset research firm K33 Research, said in a note.

He said that at the current discount level, "the market is still implying that GBTC will remain close-ended until 2042 (when adjusting for annual fees). Thus one could very easily make the argument that GBTC still remains substantially underpriced due to backlash from all the built-up leverage from 2020-2021."

Rumors also emerged about Fidelity, another investment management giant, possibly filing for a spot BTC ETF or acquiring Grayscale. A Fidelity spokesperson told CoinDesk that the firm had not publicly announced any plans to file. "No filing or refiling has been made since the SEC's denial of the Wise Origin Bitcoin Trust application," the spokesperson added, referring to the firm's application for a BTC-focused ETF in March 2021.

UPDATE (Jun. 20, 16:07 UTC): Adds comment from K33 Research analyst.

UPDATE (Jun. 20, 17:02 UTC): Adds additional quote from Fidelity spokesperson.