Grayscale Bitcoin Trust Beats Nvidia with a 220% Gain This Year Amid ETF Hopes

27/10/2023 12:22

According to CoinDesk: Contrarian investors who bought Grayscale Investment's bitcoin trust (GBTC) earlier this year have been well rewarded, with GBTC shares having jumped 220% to $26.79 according to TradingView. This makes GBTC's performance more impressive than Nvidia Corp, the S&P 500's best-performing stock, which has risen 198%.Bitcoin itself has doubled in value this year to $35,000, while traditional fixed-income instruments like government bonds have seen drastic declines. GBTC's success is in large part due to growing optimism that the U.S. Securities and Exchange Commission (SEC) is likely to approve converting the Grayscale Bitcoin Trust into an open-ended exchange-traded fund (ETF) investing in bitcoin directly.This optimism has seen the discount at which GBTC shares trade compared to the trust's net asset value (NAV) narrow from 46% to 13%. Investors have been buying GBTC shares while hedging downside risk by simultaneously shorting bitcoin in the spot/futures market. If the ETF conversion is approved, market makers are expected to bring GBTC's price back to its NAV.With the GBTC discount quickly narrowing amid increased likelihood of the ETF conversion being approved by the SEC, traders may now begin to unwind these hedge positions, which would involve buying back their shorted BTC futures contracts. This could put upward pressure on bitcoin prices.Bitcoin has appreciated 28% within two weeks and exceeded $35,000, primarily driven by rumors of a spot ETF, including the alleged listing of BlackRock’s spot bitcoin ETF ticker, IBTC, on the DTCC's website.While many expect the SEC to approve several spot-based ETFs early next year and expect bitcoin to surge to $50,000 and above following these approvals, the financialization of bitcoin could also create additional selling pressures in the market.

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Grayscale Bitcoin Trust Beats Nvidia with a 220% Gain This Year Amid ETF Hopes

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