Grayscale’s GBTC to trade first ahead of all, Bitcoin pump closing in?

The first digital currency investment product, with a market capitalization of over $20 billion and allowing investors to engage with Bitcoin indirectly, has achieved a significant milestone by transforming into an Exchange-Traded Fund (ETF). On January 11, 2024, Eric Balchunas, Bloomberg’s ETF expert, shared on X (formerly Twitter) that Grayscale Bitcoin Trust (GBTC) has successfully undergone the transition into an ETF.

Grayscale Bitcoin Trust transition Bitcoin ETF

According to the post shared by Eric on X, $GBTC has officially become an ETF, giving it an advantage in trading volume today. However, it comes with a high 1.5% fee that financial advisors might find unattractive. It will be interesting to see how these factors balance out in the market.

Just like that $GBTC has completed its transition into an ETF. It's got the ETF-tag and DES page on Bloomberg. It is bringing a (volume) gun to a knife fight today but on flip it has that advisor-repelling 1.5% fee. Will be fascinating to see how those two things offset or dont pic.twitter.com/PgHoNZlf6B

— Eric Balchunas (@EricBalchunas) January 11, 2024

Several times before, the Securities and Exchange Commission (SEC) rejected Grayscale’s application to convert its GBTC into a Bitcoin ETF due to regulatory concerns in the crypto landscape. However, if you are not aware, GBTC, offered by Grayscale Asset Management, owns a higher amount of Bitcoin than any other individual on Earth. According to the data, Grayscale holds nearly 3.5% of the total Bitcoin supply.

Also Read: Grayscale’s clarifies GBTC tax matters amid ongoing ETF evaluations

With the approval to convert GBTC into a spot Bitcoin ETF, the SEC has now approved a total of 11 spot Bitcoin ETF applications. However, despite the approval, SEC Chair Gary Gensler stated that cryptocurrencies need more regulation to protect investments.

“Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto,” Gensler said.

Impact of GBTC transition to spot Bitcoin ETF

However, earlier this month, on December 19, 2023, when GBTC was trading at a discounted price, a significant number of GBTC shares traded in the secondary market at a discounted price to net asset value (NAV), as reported by JP Morgan.

Additionally, the report mentioned that over $2.5 billion of funds moved into GBTC from January 2023 to December 2023, which may have a significant impact on Bitcoin prices for shorter periods. The JP Morgan report also suggested that if GBTC converts into a spot Bitcoin ETF, Grayscale may experience over $2.5 billion of outflows.