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The price of Bitcoin is finding buyers at $36,970, and data showing optimism about the approval of a spot Bitcoin ETF is strengthening. One of the most important indicators is the discount rate of the GBTC fund. The rate, which turned negative in 2021, has started to approach zero again as the possibility of conversion to an ETF increases. If this recovery can be maintained, further growth in cryptocurrencies is expected.
Will Spot Bitcoin ETF Be Approved?
The strong belief in the approval of the spot Bitcoin ETF by the cryptocurrency markets has led to the lowest level of the GBTC discount since July 2021. According to Ycharts data, we have seen the GBTC discount of the Grayscale Bitcoin Trust fall to as low as 10.35% below the net asset value. This rate is determined based on the ratio of total assets to the ETF price. Each GBTC share corresponds to a certain amount of BTC. If the share price is below the BTC equivalent value (the expected value), it causes a negative premium.
Since February 2021, GBTC has been trading at a discount compared to the actual price of Bitcoin, and in December of last year, it was up to 48% cheaper. So, an investor who bought GBTC shares worth 1 BTC before February 2021 had shares worth 0.52 BTC in December 2022.
According to Craig Salm, General Counsel at Grayscale, Grayscale has long been aiming to convert the Trust into a spot exchange-traded fund (ETF), which would allow it to trade “like a stock on a national securities exchange such as NYSE Arca or Nasdaq.”
Has the Crypto Bull Market Begun?
The return of the GBTC discount to the 10% zone suggests that the positive zone is now a matter of time. This could lead to the start of strong upward days in cryptocurrencies. The U.S. Securities and Exchange Commission (SEC) has so far rejected every application for a spot Bitcoin ETF, including Grayscale’s, but in October 2023, the Appeals Court asked the regulatory agency to review its decision.
Now, if the SEC cannot find a reason for denial that contradicts the approval of futures ETFs, it will be forced to approve the applications. With the increasing interest from giants like BlackRock and Fidelity, the beginning of the expected crypto bull market is anticipated after the approval of ETFs.
