Grayscale Court Wins GBTC Trading Volume Soars 17%

By Michael Bodley, Blockworks

Today, Grayscale scored a major court victory against the SEC, heralding a bright day for its crypto offering.

**The Washington Circuit Court of Appeals granted Grayscale's petition to review the SEC's denial of its application to convert GBTC into a spot bitcoin ETF. ** As expected, the three-judge panel's decision revived hopes of spot bitcoin ETF approval.

Grayscale's Bitcoin Trust (GBTC) is up nearly 17% in secondary trading today to $20.56. Based on Grayscale's per-share holdings, the company's shares rose 7.18% to $25.09. As a result, assets rose to $17.4 billion from $16.2 billion the previous day.

GBTC's trading volume recorded the largest daily trading volume in value terms since June 21, 2022.

Today’s news also brings renewed attention to efforts by major asset managers such as BlackRock and Fidelity to launch their own spot bitcoin ETFs.

Traders and other market participants were bullish on the chances of those filings Tuesday, given Grayscale's preliminary results. They also attempted to analyze what the ETF approval would mean for Bitcoin liquidity and for institutional and retail investors.

Paul Cappelli, head of liquid passive strategies at Galaxy Digital, said the court's decision was "a watershed moment for the space, with ETFs being an underlying product," adding that ETFs have fueled trading in commodities, including gold and oil, because "investors Would like access."

Bitcoin ( BTC ) was up about 7% on the day as of Tuesday's close in New York, snapping an intraday run of short-term gains.

Assets keep increasing

GBTC is expected to continue to reduce the trust's discount to net asset value (NAV) by Tuesday's close.

The bitcoin trust was trading at $17.58 per share on the secondary market on Monday, when Grayscale valued it at $23.41 per share.

Grayscale is suing the SEC for the first time since June 2022 after U.S. regulators blocked the company from converting GBTC into an ETF, which trades at a steep discount to its net asset value.

Rahsan Boykin, Hashflow’s general counsel, noted that it’s “an interesting ruling,” considering “the way the judge broke down the SEC’s argument ... it’s a pretty harsh position, in my opinion.”

Grayscale has launched an ETF to enable the redemption of GBTC shares, and once the redemption begins, ETF arbitrageurs will restore the product to its net asset value.

"Since our founding in 2013, Grayscale has built our product suite in compliance with U.S. financial rules and regulations, based on a fundamental belief that investors deserve transparent, regulated access to cryptocurrencies," said the CEO Michael Sonnenshein said in a statement.

Should Grayscale ultimately succeed, the broader bitcoin and cryptocurrency market should react positively, Cappelli said, adding that the event was "certainly not priced in."

Cappelli said there could be "some volatility" in the market, adding that it "does indicate that we think demand for bitcoin is going to go up."

"One thing everyone should remember is that this is just another step in the process," he noted. "While this is a big step forward and provides clarity, it will still take some time before there are spot ETFs in the market."