On August 29, the United States Court of Appeals ruled reigned in favor of Grayscale in its legal battle against the U.S. Securities and Exchange Commission (SEC). Following this, the trading volume of Grayscale’s GBTC shares increased significantly, rising to a two-year high.
GBTC Shares See 17% Rise
According to facts from Yahoo Finance, GBTC’s share price opened at $17.66 and closed at $20.56 that day, up nearly 17% from the previous day. In addition, the fund experienced its busiest day in over a year, with over 19 million GBTC shares change hands. This volume jump was the highest for the fund in more than two years.
When you consider that, these numbers are not surprising Grayscale victory offers bullish outlook for the fund. Additionally, Grayscale’s GBTC is one step closer to converting into a Spot Bitcoin ETF, so many investors may want to get into the fund at a discounted price.
GBTC currently operates as a closed-end fund and has seen a discount of as much as 48.89% of its net asset value (NAV) in December 2022. This discount is reduced to about 18% after the court ruling in favor of Grayscale. However, some still believe that this gap could be closed further, especially if Grayscale’s ETF application is approved.
Share price rises 17% in one day | Source: Grayscale Bitcoin Trust on Tradingview.com
Big win for the crypto community
Had grayscale archived a lawsuit following the SEC’s refusal to grant his application transfer his GBTC fund in a Spot Bitcoin ETF.
Grayscale argued that the SEC acted arbitrarily and erratically by not giving it the same regulatory treatment that the Commission did to the Teucrium Bitcoin Futures Fund and the Valkyrie XBTO Bitcoin Futures Fund.
The fund stated that it deserved the same treatment as the Bitcoin futures fund because the prices of both Spot and Futures Bitcoin ETFs were “99.9%” correlated, carrying the same risk of fraud and manipulation.
The court adopted Grayscale’s argument and agreed that the SEC had not given sufficient reason to deny Grayscale’s application while the Bitcoin futures funds were being approved.
With this statement, the SEC’s main reason for not approving a Spot Bitcoin is no longer relevant, as the Commission can no longer refuse applications solely because the Spot Bitcoin market is not a regulated market of significant size.
The court already ruled that both funds (spot and futures) are comparable, so the supervisory sharing agreements between these exchanges and the Chicago Mercantile Exchange (CME) should be enough to deter manipulation in the spot or futures market.
While it remains to be seen what step the SEC will take with respect to the Court of Appeals rulingis more likely that the Commission will have to approve the pending proposal Discover Bitcoin ETF applications unless it can find another reason to refuse these proposals.
Featured image of Bitcoinist, chart from Tradingview.com