The price of Bitcoin was boosted by news that Fidelity Investments reportedly plans to follow BlackRock’s lead and apply for a Bitcoin spot ETF.
Grayscale Bitcoin Trust (GBTC) shares hit a one-year high on Tuesday, closing at $19.47, up 7.1% for the day, fueling expectations of its transformation into an exchange-traded fund (ETF), bringing optimism to the market.
Meanwhile, the actual trading price of Bitcoin rose only 1.4% to $30,692. However, the news that Fidelity Investments joined the Bitcoin ETF race caused the price of Bitcoin to soar to nearly $31,000.
BlackRock shares surge 50% since filing
GBTC’s (Bitcoin Investment Trust) recent rally has gained even more momentum since BlackRock Inc. filed to launch a Bitcoin ETF on June 15.
In the past two weeks, the price of GBTC has risen sharply by nearly 50%. BlackRock is the world's largest asset management company with an astonishing $9.1 trillion in assets under management, and it has a very important influence in the investment community.
The long-standing gap between GBTC’s price and Bitcoin’s is narrowing. According to Ycharts data, GBTC is currently trading at a 30% discount to its net asset value (NAV), reaching its lowest level since September last year.
Optimism about ETF conversions
The continued rise in GBTC’s price comes as financial services giants Invesco and WisdomTree are attempting to apply to offer exchange-traded funds (ETFs) based on physical Bitcoin, after their applications were rejected by the U.S. Securities and Exchange Commission (SEC).
Investors are optimistic about GBTC because BlackRock has also applied to launch a Bitcoin ETF, which may pave the way for a successful ETF launch. This is good news for Grayscale because if it converts to an ETF, it may eliminate the trading discount of GBTC.
Grayscale has long aimed to convert its trust into an ETF, and some investors are betting that a successful conversion would eliminate GBTC’s trading discount.
At the same time, market participants are also increasingly concerned about the outcome of the lawsuit between Grayscale and the U.S. Securities and Exchange Commission. Earlier this year, Grayscale filed a lawsuit against the SEC after its application to convert its Bitcoin Trust Fund into an ETF was rejected by the SEC. Therefore, if Grayscale can obtain a favorable result in the lawsuit, it may further narrow the trading discount of GBTC.
