24% discount or not, can Grayscale’s Bitcoin Trust count on real support

Grayscale Bitcoin Trust, arguably the grand daddy of crypto-funds, may just have fulfilled a long-held ambition. It became an Exchange-traded fund (ETF)— at least in name. It officially submitted an application on 19 October to the U.S Securities and Exchange Commission to convert its fund into a BTC spot ETF.

Despite the SEC’s red flag to a spot ETF, investors have now shared their thoughts, one favouring the conversion of Grayscale’s BTC Trust into a spot ETF.

Support across the board

Bloomberg’s Senior ETF analyst Eric Balchunas, on 15 February, claimed that 95% of its investors are in favor of the much-awaited conversion.

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Just glancing through the many comments from ppl to the SEC re converting $GBTC to an ETF and 95% are in favor of it and most using real names and pointing to the stupefying fact that futures ETF ok but spot not. eg: pic.twitter.com/j15iNYnh8R

— Eric Balchunas (@EricBalchunas) February 14, 2022

Different investors highlighted similar interests for a spot ETF, when compared to Futures ETFs.

The SEC, for its part, has continued to delay

its decision on the former due to fears of Bitcoin spot ETF manipulation. On the contrary, the SEC has already approved 3 Bitcoin Futures ETFs. Alas, countries such as Canada have been open to the same, approving investment products such as the former.

Nonetheless, the demand for a physically-backed BTC ETF is on the rise. In fact, the tweet also hinted at possible manipulation concerning the equity market. The point being that manipulation isn’t something just restricted to digital assets, as cautioned previously by regulators.

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Here's one pointing out how the stock market can be just as manipulated and volatile as crypto pic.twitter.com/krToLZ36Gw

— Eric Balchunas (@EricBalchunas) February 14, 2022

Different crypto-related firms such as Coinbase have reiterated the same concern over this issue. For example, in a letter to the SEC, the company projected its pro-spot ETF stance.

At the time, Balchunas had praised this move, despite the probability of massive competitor(s) if and when SEC allowed the same.

24% discount on purchase

At the time of writing, the GBTC fund was trading at a discount of 24.75%.

According to Ycharts, the same has seen a steep decline lately. Grayscale’s Bitcoin Trust has been trading at a massive discount in recent months thanks to speculations and uncertainty in the market.

If approved, Grayscale would convert the trust into a spot ETF and the 24% discount opportunity will cease to exist. (BTC currently priced at around $43,600, the discounted fund price would be equivalent to around $32,500.)