Grayscale’s BTC fund shows record trading and narrowing discount amid ETF approval buzz

Grayscale’s Bitcoin Trust experienced a surge in trading activity on Jan. 8, coinciding with a significant reduction in the fund’s discount to 6.82%, marking its lowest point since April 2021. This increased activity was driven by market expectations surrounding the potential approval of a spot exchange-traded fund (ETF).

Bloomberg’s senior ETF analyst Eric Balchunas disclosed that the BTC trust exhibited remarkable trading activity during the reporting period, surpassing 99% of the existing 3000 ETFs. The recorded volume amounted to $431.66 million.

On the other hand, the GBTC discount, which had been on a downline trend over the past several months, continued in the same vain. Data from Grayscale showed that secondary sales of the shares closed on Jan. 8 at $39 while the holding per share stood at $41.

ETF moves

Grayscale is among the many applicants, including BlackRock, Bitwise, and others, awaiting the U.S. Securities and Exchanges Commission’s (SEC) decision about their applications for a spot Bitcoin ETF.

Over the past several months, the market has actively anticipated that the financial regulator might approve these applications, citing numerous reasons.

The expectations reached a crescendo on Jan. 8 after the SEC responded to several applicants who submitted their  S-1 registration, which contained information about their fees and  seed funding details.

Meanwhile, this response sparked speculations that this could be another delay tactic employed by the financial regulator.

However, ETF analyst James Seyffart assured that the move does not necessarily signal a delay as additional comments like this are expected. He added that pending applicants would likely file amendments today to address the comment.

Finance lawyer Scott Johnson further chimed in that the regulator could still approve the applications pending the comments, citing the regulator’s handling of Hashdex’s futures ETFs in 2022.

“More than anything, these quick comments demonstrate SEC working to push everything forward for a quick approval and launch (vs what we saw with futures),” he added.

Others also suggested that the fast interactions between the SEC and the applicants are part of efforts to ensure that the ETFs are approved by Jan. 10 and can begin trading as early as Thursday, Jan. 11, or Friday, Jan. 12.