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Grayscale's application to convert its GBTC fund into a Bitcoin spot ETF has seen the light of day. Grayscale achieved a legal victory at the end of August when the court ruled that the SEC should reconsider its previous denial of Grayscale's application. Subsequently, the SEC did not take any appeal measures, and earlier this week, the court officially ruled on the case, requiring the SEC to re-examine the application.
Following Grayscale's legal victory, according to Coinglass data, the premium rate of GBTC has reduced significantly from its deepest point of -48.89% in December of last year to the current -13.12%. GBTC's price has also risen significantly amid Bitcoin's recent substantial gains, with a gain of over 20% in the last 5 days.
According to TradingView data, GBTC's price has surged 226.71% to $26.79 year-to-date. In comparison, the S&P 500 index has risen by 9%, the best-performing stock in the S&P 500 index, NVIDIA, has risen by 191.96%, and Bitcoin has risen by 106.87%, all of which are outperformed by GBTC.
It is worth noting that "Queen of Stocks" Cathie Wood's Ark Invest sold all of its NVIDIA shares in January, missing out on this year's gains. However, Ark Invest significantly increased its holdings of GBTC shares in November and December of last year, reaping huge returns.
When GBTC's price hit its low range of $7.46-$9.48 in November of last year, ARKW bought 450,272 GBTC shares. As GBTC's price rebounded, Ark Invest began to gradually realize profits, reducing its GBTC holdings from a peak of 6.597 million shares in December of last year to the current 4.889 million shares.
Will the approval of the GBTC conversion application boost Bitcoin's rise? Coindesk reported that traders would hedge the downside risk by selling Bitcoin in the spot/futures market while buying GBTC shares. Once Grayscale's application is approved, market makers will restore the GBTC price to its net asset value (NAV).
The bi-legged strategy aimed at profiting from the narrowing of the GBTC discount may have limited Bitcoin's gains earlier this year. With the increasing likelihood of SEC approval, as the discount rapidly narrows, traders may abandon this strategy, including shorting Bitcoin using futures, making Bitcoin appear more bullish.
Alexander S. Blume, Managing Partner of Two Prime Digital Assets, stated that as the approval of the GBTC ETF conversion seems increasingly likely, investors know that market makers will restore the price to NAV when trading opens. As this investment tool returns to NAV, the pressure to short Bitcoin seems to decrease, supporting upward pressure on the spot price of Bitcoin. |
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Post time 28-10-2023 08:37:20