Last week, $9.5 trillion asset manager BlackRock took a huge step by filing with the US Securities and Exchange Commission (SEC) for a Bitcoin exchange-traded fund (ETF). The traditional financial giant’s domino effects appear to have bolstered investor sentiment and pushed Grayscale’s Bitcoin Trust (GBTC) higher.
According to Yahoo Finance, GBTC surged more than 12% on the news before markets closed on Friday, with shares hitting $15.12. US markets were closed on Monday to mark June 19, a federal holiday commemorating the day word reached Texas that enslaved people had been emancipated.
Grayscale’s flagship product, GBTC, allows investors to trade stocks of trusts that hold pools of bitcoin, with each stock designed to track the current bitcoin price; The idea is that investors can invest in Bitcoin without actually buying and holding the asset itself.
The so-called “GBTC rebate” hit a monthly low of -36.61% according to YCharts, with Bitcoin trading at $26,436 according to information from Coingecko. The discount refers to the difference between the price of the shares and the net asset value (NAV) of GBTC’s bitcoin holdings.
Grayscale, a subsidiary of Digital Currency Group (DCG), has been bidding for a spot Bitcoin ETF for years — as have several other companies. The company submitted an application back in 2016 and withdrew it a year later.
“We believed that the regulatory environment for digital assets was not advanced enough to successfully bring such a product to market,” Grayscale said at the time.
In 2021, they resubmitted an application, but it was denied by regulators on the grounds that the authorities said it was a “market susceptible to manipulation.” Repeated rejection of its ETF application prompted Grayscale to take legal action against the SEC last year. The trial reached a pivotal moment in March this year after judges questioned the agency’s decision-making.
However, investors seem optimistic today. Though the long and extenuating litigation with the SEC seems endless, BlackRock’s impeccable track record of ETF filing (currently at 575-1) brought a breath of fresh air to GBTC.
The SEC has been adamant in its “anti-crypto” stance, suing several notable industry players in recent weeks. SEC Chairman Gary Gensler, known for having taught a Bitcoin and blockchain course at MIT, is a staunch opponent of the cryptocurrency space.