What if Grayscale’s Bitcoin fund became an ETF? Is the price falling or rising?

Grayscale has had a Bitcoin fund for years where you can buy shares and the value should follow the price of Bitcoin. But now Grayscale wants to convert this GBTC fund into an ETF for several reasons. What could this mean?

8.7% discount on Bitcoin

Currently, GBTC is trading at a discount of approximately 8.7% to the value of Bitcoin the fund holds. This means that investors pay a lower price for a share of GBTC than for the amount of Bitcoin that share represents. It also means that many investors in this fund are underwater.

If GBTC is converted into a fund, different rules apply because it concerns a different product. The discount expires overnight. Early investors may be waiting until they can finally sell their shares without losses. If this happens on a large scale, buy the decline!

When will the Bitcoin ETF arrive?

Regardless of whether this decline occurs or not, according to Craig Salm and Edward McGee, an ETF offers a fairer investment for investors. Both work for Grayscale as Chief Legal Officer and Chief Financial Officer, respectively.

They say there will be an ETF anyway, but we can’t predict exactly when. They are dependent on the SEC for this. GBTC’s transition to a Bitcoin ETF is currently awaiting approval from the US Securities and Exchange Commission.

“GBTC investors do not have to do anything. When investors look at their GBTC shares after they are listed on NYSE Arca, all they see is that the shares are listed on NYSE Arca and not on OTCQX. GBTC’s share repurchase is expected to be based on an exemption previously granted under SEC Regulation M for products with similar features.

The law prohibits the sale of shares within a certain period after a public offering to prevent investors who get in early from getting an unfair advantage. An exception to this rule is an exemption under Regulation M. Exceptions are granted in situations where the SEC believes the rule is not necessary to protect investors.