GBTC Up 9.6% After Gaining Ground Against the SEC in Court

At Tuesday’s oral arguments, the three-judge panel was mostly skeptical toward SEC’s reasoning for blocking Grayscale’s efforts to turn its GBTC into a spot ETF. Quickly after the hearing was concluded Grayscale Bitcoin Trust turned sharply to the green and gained nearly 10% over the course of just a few hours and traded at around $12.90 after the seemingly successful day in court.

GBTC Discount Narrows After Grayscale’s Day in Court

Grayscale has been attempting to turn its Bitcoin Trust into America’s first spot BTC exchange-traded fund for well over a year. Its efforts have, however, been repeatedly frustrated by the Securities and Exchange Commission. Finally, the company sued the SEC last summer calling the refusal discriminatory.

Grayscale finally got its day in court on Tuesday, March 7th. The three-judge panel proved unconvinced by the SEC’s argument that a spot Bitcoin ETF should not be accepted, unlike BTC futures exchange-traded funds, as futures are, according to the Commission’s argument, more resistant to market manipulation. While the final decision is still many months away, investors apparently interpreted today’s hearing as a fairly decisive victory for Grayscale. 

After the oral arguments were concluded, Grayscale Bitcoin Trust started rising fairly significantly ending the day 9.60% in the green at $12.90—one of its highest prices in the last six months. The now-infamous discount also narrowed and fell below 35%—the lowest it has been since October. Grayscale Ethereum trust also fared well and rose nearly 3%.

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Despite Tuesday’s Victory, Grayscale Increasingly Under Pressure

While the Tuesday hearing likely bodes well for GBTC and its fight with regulators, it is perhaps worrying to note that Grayscale is still facing a deluge of lawsuits from numerous companies across the industry. The latest of these was unveiled as recently as March 6th.

This Monday, FTX revealed that Alameda Research is suing Grayscale in an effort to lower fees and recover funds worth at least $9 billion. The lawsuit also alleges that Grayscale is unjustly preventing shareholders from accessing their assets and that its policies are to blame for BGTC’s trading discount. A Grayscale spokesperson, in turn, called the lawsuit misguided.

December and January also saw lawsuits targeting the company. Late in 2022, Fir Tree, a hedge fund, filed a “books and records” suit in an attempt to, much like Alameda, reduce fees and compel Grayscale to allow investors to exit the Trust. More recently, Osprey Funds sued the company claiming it had made “false and misleading” statements with regard to GBTC’s conversion into an ETF.

Do you think today’s hearing will lead to GBTC finally turning into a Bitcoin ETF in 2023? Let us know in the comments below.