Analysts predict that GBTC will open up Bitcoin to traditional investors. The crypto world has been facing several events that have sparked debates as well as influenced the entire digital currency market. Among them is the spot Bitcoin exchange-traded funds (ETFs) that have caused a rise in investor interest in crypto.
The eminence of BTC ETFs has led to an increase in Bitcoin’s price and market capitalization. The Grayscale Investment’s Bitcoin Trust (GBTC) is among the anticipated ETFs.
The GBTC has shown its resilience in the crypto market as it experienced a remarkable gain this year from its period of gloom in the crypto space in January. Currently, GBTC has witnessed a huge gain of over 200%, beating the tech giant Nvidia in returns. This can be linked to Bitcoin’s growing interest in the ETF products to be approved by the US Securities and Exchange Commission (SEC)
GBTC market expansion hits new highs
GBTC shares have recorded a gain of about 220% this year and are currently tagged at $26.79 based on market data analysis from TradingView charts. On the other hand, the tech giant Nvidia Corp (NVDA), the top-performing S&P 500 stock, has witnessed a gain of 198% as the index rose by a 9% gain.
Additionally, Bitcoin has doubled this year, recording a 100% gain to levels reaching $35,000, not seen since April last year. Moreover, traditional fixed-income instruments, including bonds, have all plummeted.
The contrarian investors seeking to invest in GBTC are now in their harvest season as the price scores to new levels and are now receiving handsome rewards.
The GBTC performance might be attributed to the awaited ETF approval that has generated a lot of interest in the crypto community. The United States Securities and Exchange Commission (SEC) has been strict on the Grayscale Bitcoin Trust application approval to an open-end exchange-traded fund (ETF) that would invest in Bitcoin.
As the crypto community awaits this approval, that is more certain than not, and its anticipation has generated talks on the product that would be an essential tool for investment to both retail and institutional investors.
Market sentiments on GBTC gains
GBTC’s shares relative to the net asset value (NAV) on the trust’s discount have narrowed down to 13% from 46% in this year’s record. This has been fostered by traders buying GBTC shares while still heading downside risk and simultaneously selling BTC in the future and spot market. Upon approval of the ETFs, market makers will correct the price to the NAV.
According to an email Marex Solution’s co-head of digital assets, Ilan Solot, sent last week, “GBTC is the gift that keeps giving. Congratulations to those (many on this list) who nailed the narrowing of the spread playing against the futures.”
Additionally, the bi-legged strategy adopted aimed to generate profits from the GBTC discount narrowing may have resulted in capping Bitcoin gains in this year’s first quarter. Considering the rapidly narrowing discount coupled with the Bitcoin ETF pending approval by the SEC, traders may be strategizing to unwind the strategy. This would include the short BTC futures leg, which would realize a bullish market pressure for the digital currency.
Following comments made by the managing partner at Two Prime Digital Assets, Alexander S. Blume:
As the GBTC ETF conversion approval seems increasingly likely, investors know that market makers will bring the price back to NAV as soon as it starts trading. As this investment instrument normalizes back to NAV value for investors, it seems likely that short BTC pressure will subside and support upward pressure on BTC spot price.Alexander S. Blume
Consisting of Bitcoin’s rise by 28% in the last two weeks, its price could easily reach $50,000 if the ETFs are approved.
In addition, shares of crypto exchange Coinbase surged almost 6% as investors cheered the approval of a long-awaited bitcoin spot exchange-traded fund. It might be a watershed moment for the business, which has been battling the Securities and Exchange Commission in federal court in Manhattan.
The SEC has faced criticism from both industry and Congress for its perceived “regulation-by-enforcement” strategy. Critics contend that the SEC is pursuing crypto exchanges punitively in the aftermath of FTX’s demise, while supporters argue that many cryptocurrencies are indeed securities and that additional regulation is not required to establish the SEC’s authority.