Court victory, the trading vol. of GBTC surged by 17%, as reported on Aug. 30th

Kalkin995

Grayscale has achieved a significant victory against the U.S. Securities and Exchange Commission (SEC) in court, bringing a positive development for its crypto products. The Washington D.C. Circuit Court of Appeals approved Grayscale's petition to review the SEC's denial of its application to convert GBTC to a spot Bitcoin ETF. As expected, the decision by a panel of three judges has rekindled hopes for the approval of a spot Bitcoin ETF.

The Grayscale Bitcoin Trust (GBTC) saw a nearly 17% increase in secondary trading, reaching $20.56 on August 30th. Based on Grayscale's per-share holdings, the company's stock price rose by 7.18% to $25.09. As a result, the assets increased from $16.2 billion to $17.4 billion from the previous day.

The trading volume of GBTC marked the highest daily trading volume in terms of value since June 21, 2022. This news has also refocused attention on major asset management companies like BlackRock and Fidelity's efforts to launch their own spot Bitcoin ETFs.

Given Grayscale's preliminary result, traders and other market participants are optimistic about the prospects of these applications. They are also attempting to analyze what the approval of ETFs means for Bitcoin liquidity and what it signifies for both institutions and retail traders.

Paul Cappelli, Head of Liquidity Passive Strategies at Galaxy Digital, stated that the court ruling is a "watershed moment for the space, ETFs are a foundational product," adding that ETFs drive trading in commodities like gold and oil because "investors want access."

As of Tuesday's New York closing, Bitcoin (BTC) rose by about 7%, ending the intraday short rally.

Assets Continue to Grow

It is anticipated that GBTC will continue to reduce the discount to its Net Asset Value (NAV) relative to assets before Tuesday's close.

The trading price of the Bitcoin trust on the secondary market was $17.58 per share, while Grayscale valued it at $23.41 per share.

Since Grayscale's first lawsuit against the SEC in June 2022, following the regulator's halt to the company's attempt to convert GBTC into an ETF, the trading price of this instrument has been significantly discounted from its Net Asset Value.

Rahsan Boykin, General Counsel at Hashflow, noted that this is an "interesting ruling," given the way "the judges dissected the SEC's arguments...in my view, it's a fairly tough stance."

Grayscale had previously introduced an ETF to enable the redemption of GBTC shares, and once redemptions begin, ETF arbitrageurs restore the product to its Net Asset Value.

"Since our inception in 2013, Grayscale has operated under U.S. financial rules and regulations in constructing our product suite, based on a fundamental belief that investors should have transparent, regulated access to cryptocurrencies," CEO Michael Sonnenshein stated in a statement.

Cappelli expressed that if Grayscale ultimately succeeds, the broader Bitcoin and crypto market should respond positively and noted that this event is "certainly not priced in."

Cappelli suggested that the market might "experience some volatility" and added that this "certainly speaks to our belief that Bitcoin demand is going to increase."

"One thing everyone should remember is that this is just another step in this process," he pointed out. While it's a big step forward and provides clarity, it's still going to take some time before we see a spot ETF in the market.