In October last year, Grayscale officially filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) for rejecting Grayscale’s application to transform the Bitcoin Trust Fund (GBTC) into a Bitcoin spot ETF.

Since the verdict of this case will be closely related to the success of the US Bitcoin spot ETF and will affect tens of millions of investors and ETF issuers, it has attracted much attention from the industry.

GBTC negative premium continues to narrow

We know that GBTC has continued to show a "negative premium" since February 2021, and it once approached -50% when Bitcoin plummeted at the end of last year.

However, as the market recovers and the possibility of GBTC transforming into a spot ETF increases, the negative premium continues to decrease. According to Ychart data, as of last Friday (18th), GBTC’s negative premium has reached approximately -25%.

What will happen if GBTC successfully breaks through?

According to Blockworks, Bloomberg ETF analyst James Seyffart predicted that the official announcement and timetable for GBTC's conversion to an ETF will bring GBTC's negative premium close to zero; however, Seyffart also said that if Grayscale ultimately fails, it is possible that we will see the negative premium bottom out again.

Chase White, a policy analyst at Compass Point Research & Trading, also predicts that the GBTC discount may narrow significantly to 10% after Grayscale wins. White explained:

The main reason for the GBTC discount is Grayscale's inability to simultaneously redeem and issue shares, allowing real-time arbitrage of the discount to NAV.

When will the court ruling come out?

James Seyffart had previously expected that 8/15 would be the earliest time for the verdict to be released, but there was no good news last week.

According to an official announcement from Grayscale at the end of July, they predict that the court will make a ruling this fall:

We expect the court to rule on GBTC in fall 2023 — an outcome relevant to US spot#bitcoinETFsthat will impact millions of investors & issuers.