According to the digital asset data provider CCData, Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin (BTC) fund, has lowered the discount on its net asset value (NAV) to nearly the lowest level in two years.
Recent data shows that the discount on the $15 billion market cap product’s NAV reached its lowest level since December 2021, with a decline of 14.8% in October. This could be a significant development from the beginning of the year. A decline in a fund’s NAV essentially means that the fund’s shares are trading at a lower price than the actual value of the tokens held by the fund.
In general, a narrowing discount can indicate that investors have a more optimistic view of GBTC. As mentioned, the decline in NAV reached around 50% at the end of last year and spent most of the first half of 2023 in a range of around 40%. However, there has been a noticeable change in sentiment in the last quarter.
A series of positive developments surrounding Grayscale Investments’ conversion proposal to a spot Bitcoin ETF could explain this turnaround. Unlike leveraged products that occasionally deviate from the value of underlying assets, a spot ETF keeps the value of the fund aligned with the token value.
The US Securities and Exchange Commission (SEC) rejected the application last year, claiming that it did not comply with investor protection standards. Following this, Grayscale filed an appeal requesting a review of the regulator’s decision.
A court ruling in early August was in line with Grayscale’s claims and instructed the SEC to review its decision. This decision increased hopes for a future conversion while also creating a divide between GBTC and NAV. As a result, Grayscale Bitcoin Trust (GBTC) has lowered its discount to the lowest level in resistance to the decline in underlying tokens. This resistance, associated with hopes for the conversion to a spot Bitcoin ETF, indicates a positive sentiment among investors. Grayscale’s request for a review of the regulator’s decision and the court ruling could be decisive for the future of GBTC.