Grayscale court win spurs GBTC trading volumes

GBTC volumes spiked Tuesday as traders parsed a court case outcome that could lead to a bitcoin ETF approval


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Grayscale notched a major court win against the US Securities and Exchange Commission today, triggering a day in the green for its flagship crypto product.

As Blockworks previously reported, the DC Circuit of Appeals granted Grayscale’s petition for a review of the SEC rejection against its bid to convert GBTC to a spot bitcoin ETF. As might be expected, the three-judge panel’s decision rejuvenated hopes of a spot bitcoin ETF approval. 

Grayscale’s Bitcoin Trust (GBTC) climbed nearly 17% in secondary trading today, reaching $20.56. It jumped 7.18% in Grayscale’s holdings per share calculation to $25.09. Assets, accordingly, rose to $17.4 billion from $16.2 billion the day prior. 

The flurry of GBTC trading marked its biggest volume trading day, as denominated in value, since June 21, 2022. 

Today’s news also renewed attention on the efforts by major asset managers like BlackRock and Fidelity to launch their own spot bitcoin ETFs

Traders and other market participants on Tuesday favored the chances of those applications in the light of the Grayscale initial outcome. They also sought to parse what an approval or series of approvals would mean for bitcoin liquidity, as well as institutional and retail adoption. 

Paul Cappelli, Galaxy Digital’s head of liquid passive strategies, told Blockworks that the court decision is a “watershed moment for the space, and an ETF is a foundational product,” adding that ETFs have driven commodities in terms of trading, including gold and oil, because “investors would want to have access.”

Bitcoin (BTC) was up about 7% on the day through the market close in New York on Tuesday, capping off a short-order intraday rise.

Assets on the rise

GBTC was expected to continue to lower the trust’s discount to net asset value (NAV) by Tuesday’s close. 

The bitcoin trust traded on secondary markets at $17.58 per share on Monday, when it was valued by Grayscale at $23.41 per share. 

The vehicle has traded at a notable discount to its NAV since Grayscale first sued the SEC in June 2022 after the US regulator blocked the company from converting GBTC to an ETF.

Rahsan Boykin, Hashflow’s general counsel, told Blockworks that it “was an interesting ruling,” taking into account “the way the judge broke down the argument the SEC was making…seemed to me it was coming from a pretty harsh position.” 

Grayscale had pushed for an ETF to enable redemptions of GBTC shares, with ETF arbitrageurs acting to restore the product to its NAV once redemptions open.

“Grayscale has adhered to U.S. financial rules and regulations in building our product suite since our founding in 2013, underpinned by one fundamental belief: investors deserve transparent, regulated access to crypto,” ​​CEO Michael Sonnenshein said in a statement.

If Grayscale ultimately succeeds, according to Cappelli, bitcoin and crypto markets more broadly ought to react favorably, saying the event has “certainly not been priced in.”

Cappelli said the market might “see a little bit of volatility out of the gates,” adding that this “definitely does signal what we think will be an uptick in bitcoin appetite.” 

“The one thing that everyone should keep in mind here is this is just another step in the process,” he told Blockworks. “While it’s a big step and provides clarity, this still will take some time before we have a spot ETF in the market.”

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