Grayscale Investment pulled off another twist to erode the discounted pricing, leaving its shares (GBTC) surging 220% in 2023. A market observer indicated that GBTC portrays a gift with endless yielding returns.
The market observer indicated that the share surge rewards the contrarian investors who acquired Grayscale Investment’s Bitcoin Trust (GBTC) shares in January. The GBTC share navigated the gloom and doom that engulfed the cryptocurrencies and adjacent markets.
GBTC Shake Off Discounting to Outshine NVIDIA Corp Stock Price
The GBTC shares have shaken off the discounted prices to rally 220% to exchange hands at $26.79, as per Trading View data. Meanwhile, the charting platform shows Nvidia Corp (NVDA), though portraying the best performance among the S&P stock, rallied 198% while the index only gained 9%. In the same period, Bitcoin (BTC) doubled to test the $34000 level while conventional fixed-income instruments such as government bonds crashed.
GBTC’s outperformance coincides with widespread anticipation of the Gary Gensler-chaired Securities and Exchange Commission (SEC) approving the bid to convert the Grayscale Bitcoin Trust. The trust seeks its conversion to the open-ended Bitcoin exchange-traded fund (ETF).
The optimism is fueling the surge, mainly boosted by the court ruling directing the SEC to review the GBTC application. The optimism has contributed to narrowing the discount witnessed in GBTC shares relative to the net asset value (NAV) from 46% to 13% in 2023.
Traders acquiring GBTC shares have repeatedly hedged the downside risk by simultaneously disposing of bitcoin in the spot and futures market. The approval of the conversion will allow the market makers to restore parity in the GBTC price and the NAV.
Marex Solutions, co-head of cryptocurrencies Ilan Solot, labeled GBTC as the gift continuously giving. The executive hails the investors who nailed the discount narrowing by playing against the futures.
Solot considered the bi-legged strategy to seek profit from the declining GBTC discount by capping the gains from Bitcoin at the onset of 2023. The executive opined that the fast discount narrowing coincides with the increased optimism of SEC approving GBTC conversion to the ETF. Traders should consider such a prospect to amend their strategy by including a short BTC futures leg, thereby bolstering the bullish steam around Bitcoin.
Investors are confident that the approval of GBTC-to-ETF conversion would likely prompt market makers to restore the price to the NAV levels. The march by the investment instrument towards the NAV value for the investors. Two Prime Digital Assets executive partner, Alexander Blume, observed that the movement to regain and reflect NAV value will erode the short BTC pressure. Consequently, he considers that such will support the upward pressure linked to the BTC spot price.
Spot ETF Approval Rumors Triggers Bitcoin Rally
Meanwhile, Bitcoin has rallied by 23% in the past two weeks and 27.1% in the past month, as per CoinGecko data. The rally made Bitcoin realize a 17-month high in October, mainly fuelled by the spot-ETF rumors. Such is evident in the rumor of BlackRock’s Bitcoin ETF approval by SEC, though dismissed as fake news published by Cointelegraph.
Bitcoin uptrend is fueled by the discovery of BlackRock’s spot Bitcoin ETF listing under the IBTC ticker on the DTCC’s clearing house. The move aligns with the expectations for the SEC to approve the pending applications for spot bitcoin ETFs together.
The market observers agree that Bitcoin would surge to $50,000 upon the ETF’s approval. The resulting financialization would bring additional pressure to dispose of the market. The ETF approval will present a facilitative platform for institutional participants to undertake the instrument. However, the investors are uncertain about the effect on the market.
Bitcoin Market Performance Review
A review of the Bitcoin performance reveals that the BTC daily trading volume increased 34.70% to realize $11.459 billion, indicating rising market activity. Despite the increment, the Bitcoin price is 50.41%, away from the all-time high of $69044 realized in November 2021.
Bitcoin’s uptrend has been evident in recent weeks, with the price being 50397% above the all-time low of $67.81 in 2013. The positive sentiment for Bitcoin (BTC) is evident in the 11.30% price increment in the past week that outperforms the global crypto market, whose increment trails at 2.10%.
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