The world’s largest bitcoin trust, Grayscale bitcoin Trust (GBTC), has been closing ranks around its cousin over the past year. After hitting an all-time low of -48.89% in December 2022, the gap has effectively closed to the point of hitting a two-year high.
GBTC premium stands at -10.35%
The GBTC premium over NAV is the difference between the price of a bitcoin in the bitcoin escrow and the price of the cryptocurrency on the open market. When the figure is positive (high), it means that there is a lot of demand for the trust and that it is trading above spot volumes. But when the figure is negative (low), it means that btc in the trust is trading below spot market prices.
This means that when the GBTC premium was at its lowest point in 2022, btc in the trust was trading at almost half the price of what btc was trading at that time. For many investors, this represented an opportunity to get in at a low price and it appears the gamble has paid off.
On November 10, 2023, the GBTC premium reached its highest level in two years. Data YCharts shows the premium stood at -10.35% on Friday, up more than 150% from its December 2022 lows.
GBTC premium recovers | Source: YCharts
This has been the culmination of the premium’s steady rise over the past year as investor confidence in the cryptocurrency market began to recover. The recent rally in the bitcoin and cryptocurrency market has also sustained this recovery, as evident in the steady rise in premium since October.
<img loading="lazy" decoding="async" class="aligncenter size-medium" src="https://technicalterrence.com/wp-content/uploads/2023/11/GBTC-Premium-Falls-to-2-Year-High-Time-to-Buy-a" alt="Tradingview.com bitcoin Price Chart (GBTC Grayscale)” width=”2650″ height=”1742″/>
btc steadies amid expectations of Spot ETF | Source: BTCUSD on Tradingview.com
Grayscale Moves to Convert bitcoin Trust to Spot ETF
Grayscale first moved to convert its bitcoin Trust into a spot ETF in 2022. The argument was that the United States Securities and Exchange Commission (SEC) had already approved multiple bitcoin futures ETFs and an ETF should be allowed. cash.
However, the SEC objected to this, resulting in Grayscale suing the regulator after being rejected a second time. The court will ultimately side with Grayscale and ask the SEC to review the application for a Spot bitcoin ETF.
The latest developments in Grayscale’s attempt to transform its bitcoin Trust into a spot ETF came last week when reports emerged that the SEC is currently in negotiations with the company over its filing. According to Craig Salm, CLO at Grayscale, it’s just a matter of when, not if, the SEC approves the applications.
Grayscale is currently one of 12 applicants looking to launch a Spot bitcoin ETF. The regulator still has room to continue postponing its decision. However, 2024 has been proposed as a possible timeline for the SEC to approve the first btc Spot ETF.
Featured image from CoinMarketCap, chart from Tradingview.com
