Bitcoin (BTC) plans by BlackRock appear to have sparked a rally in the “OG” institutional BTC investment vehicle.
Data from monitoring resource CoinGlass shows that on June 17, the Grayscale Bitcoin Trust (GBTC) almost hit new 2023 highs.
GBTC “premium” heads below -37%
Bitcoin market sentiment showed a modest improvement late last week as news emerged that the world’s largest asset manager, BlackRock, had filed to launch a Bitcoin spot price exchange-traded fund (ETF).
While still not allowed in the United States, a spot ETF from a stalwart entity such as BlackRock should have better chances of breaking the legal impasse, some say.
In the meantime, however, signs of optimism beyond sentiment are becoming clearer, with GBTC long trading at a major discount to BTC spot, which is on the way up.
According to CoinGlass, that discount, or a negative “premium,” used to characterize GBTC share prices, is currently at -36.6%.
While still heavily discounted, GBTC thus trades closer to zero than at almost any time this year. On June 13, for example, the discount was closer to -44%.
“If the Blackrock ETF does get approved, the real winner here is going to be $GBTC,” Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, wrote in part of Twitter commentary at the weekend.
“Because Blackrock will show the path to conversion, and GBTC’s 40%+ discount will resolve on top of industry growth.”
Cochran said that he thought BlackRock’s offering has “good odds” of getting U.S. regulatory approval.
“Very different structure than other efforts by a behemoth who doesn’t lose. ‘30 act redeemable trust w/ redemptions (unlike GBTC) + proposed rule change filing. They came to play,” he added.
ARK yet to join latest buyers
The BlackRock move is already shrouded in controversy of its own, as market commentators spar over whether it is, in fact, an ETF at all.
Related: Why is the crypto market up today?
Some argue that it will simply be a similar Trust to GBTC, while others, including Cochran, adopt a more nuanced view.
On the ETF vs Trust debate - plenty of ETFs have alt structures.— Adam Cochran (adamscochran.eth) (@adamscochran) June 16, 2023
This is an ETF as a redeemable trust not like GBTC.
The Trust component is basically what let’s them list shares that represent X amount of BTC since it’s not processing units of BTC directly at a clearinghouse.
“IT’S OK TO CALL IT AN ETF GUYS,” Cory Klippsten, CEO of Bitcoin financial services firm Swan, summarized.
“Securities Act of 1933 filing under Form S-1, NOT Form N-1A (like 99% of stock ETFs). Will trade on exchange and be redeemable to the issuer. WAY better than GBTC. Now we’ll wait to see if the SEC approves Blackrock’s spot Bitcoin ETF.”
That aside, investor interest in GBTC is rising as a result. Among the eager buyers is hedge fund North Rock Digital.
“We have been accumulating more of the greyscale trusts consistently over the last several weeks,” it announced post-BlackRock.
“RR seems massively skewed at current levels. 50% upside if Greyscale wins, which we expect, and minimal downside if they lose. This filing could be a catalyst to see them tighten to more rational levels.”
One major holder yet to up exposure, meanwhile, is ARK Invest, which continues to hold around 5.37 million GBTC shares.
Data from Cathie’s ARK — a dedicated tracking website for ARK Invest CEO Cathie Wood — confirms those holdings gradually declining through 2023.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.