Investment plans in Bitcoin (BTC) from BlackRock appear to have sparked a rally in a well-known institutional investment vehicle in cryptocurrency.
Monitoring resource data CoinGlass show that on June 17, the Grayscale Bitcoin Trust (GBTC) nearly hit new 2023 highs.
GBTC “premium” stands below -37%
Late last week, the Bitcoin market saw a slight improvement on news that BlackRock, the world’s largest asset manager, had applied to launch a spot Bitcoin exchange-traded fund (ETF).
Although not yet available in the United States, a spot ETF from a strong entity like BlackRock should have a better chance of getting out of the legal fight involved, or so some think.
Meanwhile, on the other hand, signs of optimism beyond sentiment are becoming clearer, with long GBTC trading at a significant discount to the rising BTC spot price.
According to CoinGlass, that discount, or negative “premium,” used to characterize GBTC share prices, currently stands at -36.6%.
Though still heavily discounted, GBTC is trading closer to zero than at almost any other time this year. On June 13, for example, the discount was close to -44%.
“If the Blackrock ETF passes, the real winner here is going to be GBTC,” wrote Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, in part in a comment on Twitter over the weekend.
“Because Blackrock will show the way to conversion, and GBTC’s more than 40% discount will be settled at the top of the industry’s growth.”
Cochran believes BlackRock’s offer has a “good chance” of winning US regulatory approval.
“Very different structure to other efforts by a giant that doesn’t lose. 30 redeemable trust with rebates (unlike GBTC) + rule change proposal submission. Came to get away with it,” added.
ARK has not yet joined the recent buyers
BlackRock’s move is already embroiled in its own controversy, as market commentators argue over whether it is, in fact, an ETF.
Some hold that it will simply be a GBTC-like trust, while others, including Cochran, take a more nuanced view.
On the ETF vs Trust debate – plenty of ETFs have alt structures.
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.
—Adam Cochran (adamscochran.eth) (@adamscochran) June 16, 2023
“IT CAN BE CALLED ETF”, summarized Cory Klippsten, CEO of Swan; Bitcoin financial services company.
“Securities Act 1933 filing under a Form S-1, not a Form N-1A (like 99% of stock ETFs). Will be exchange traded and redeemable to issuer. Much better than GBTC. Now we’ll wait Let’s see if the SEC approves Blackrock’s Spot Bitcoin ETF.”
Other than that, the interest of various investors for GBTC is increasing. Among the avid buyers is the hedge fund North Rock Digital.
“We have been accumulating more than the Grayscale trusts steadily over the last few weeks,” advertisement after the presentation of BlackRock.
“RR” seems very skewed at current levels. 50% up if Greyscale wins, which is what we expect, and a minimum down if he loses. This presentation could be a catalyst to see them adjust to more rational levels.”
One of the major holders that has yet to increase its exposure is ARK Invest, which still holds about 5.37 million GBTC shares.
Data from Cathie’s ARK – a tracking website dedicated to Cathie Wood, CEO of ARK Invest – confirm that those shares will gradually decrease until 2023.
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