Grayscale's Bitcoin Trust (GBTC), a security backed by Bitcoin, has tripled its price this year, from $8.20 to $26.89, significantly outpacing Bitcoin's surge which exceeded the S&P 500 by over 100% to reach $35,381. Holding $21.4B in assets, GBTC's performance has a substantial influence on the crypto market.
The price discrepancy between GBTC and Bitcoin is attributed to the closed-ended fund structure of GBTC, which imposes restrictions on quick share redemption for Bitcoin. This structure results in GBTC trading at a premium or discount relative to Bitcoin's net asset value (NAV). Notably, this discount reached nearly 50% in December 2022 but has since reduced to less than 14%.
Bracket Labs suggests that this reduction is in anticipation of GBTC's conversion to an exchange-traded fund (ETF), a move that would enable easy share redemption for Bitcoin and align GBTC with its NAV. This belief is further bolstered by BlackRock’s spot Bitcoin ETF application and the SEC's non-appeal of an August ruling against its denial of Grayscale’s GBTC conversion application.
In addition, investors are encouraged by the SEC to schedule a closed meeting on November 2, possibly to discuss applications from Blackrock (NYSE:BLK) and Grayscale for spot BTC ETFs.
On the same day, cryptocurrencies including Bitcoin and Solana saw a surge after the US Federal Reserve held benchmark interest rates steady. This decision resulted in a weaker dollar, as suggested by Fed Chair Jerome Powell's potential end to rate hikes, causing a 0.5% drop in the Asian dollar index. Consequently, Bitcoin rose 2.73%, trading at $35,402.40, and hit an intraday peak of $35,902.02 - its highest since May 2022. The global crypto market cap jumped over $1.3 trillion within 24 hours, with Bitcoin's cap reaching $689 billion. Among other cryptocurrencies, Solana registered substantial gains, while Ethereum experienced a slight increase.
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