GBTC Discount Narrows to Lowest Level Since November Following Court Hearing

The Grayscale Bitcoin Trust (GBTC) discount to net asset value (NAV) has narrowed to below 35%, its lowest point since Nov. 7, according to data from TradingView, following what seemed a favorable court hearing on Tuesday for the company.

The discount narrowed to 35% following the hearing where a panel of appeals court judges appeared skeptical about the U.S. Securities and Exchange Commission's (SEC) arguments in rejecting Grayscale’s bid to convert its GBTC into an exchange-traded fund (ETF).

The judges questioned the SEC's logic in distinguishing between bitcoin spot market prices and futures market prices.. Grayscale’s argument is the SEC acted arbitrarily in rejecting the ETF application and previously approving bitcoin futures ETFs.

The GBTC discount began to narrow last week ahead of the hearing, after widening to almost 50% in early December.

Crypto-focused hedge fund North Arrow Digital, tweeted that it remains long on GBTC following the court case. “The discounts represent very strong [risk/reward] investments given multiple potential avenues to value realization. Think it's likely SEC loses their court case,” it said.

“We have consulted many experts and feel ETF approval this year is a real possibility. Furthermore, even if they don't approve it, our feeling is the moment [SEC Chair Gary] Gensler is gone an ETF becomes quite likely.”

NRD remains long GBTC, ETHE and ETCG. In our opinion, the discounts represent very strong RR investments given multiple potential avenues to value realization. Think it's likely SEC loses their court case. Yes, they can appeal but they are starting to look really bad and an ETF… https://t.co/6jS35wgZaB

— Hal Press (@NorthRockLP) March 7, 2023

Grayscale is a subsidiary of Digital Currency Group, CoinDesk's parent company.