Grayscale Bitcoin Trust (GBTC) is an open-ended trust launched and managed by the world’s biggest crypto asset manager, Grayscale Investments, LLC, to offer access to Bitcoin. GBTC invests through derivatives such as futures, swaps, and other Commodity Futures Trading Commission (CFTC)-regulated products, outlines Paul Dykewicz, editor of StockInvestor.com.
The company aims for aggressive growth, while GBTC tracks the performance of the TradeBlock XBX Index. As for trading liquidity, GBTC dominates other Bitcoin-focused funds and exchange-traded products (ETPs).
If Dec. 15 were the last day of 2023, Bitcoin would have finished the year up almost 155%, marking the cryptocurrency’s best gain since 2020, when it soared 305%, according to Frank Holmes, CEO and chief investment officer of US Global Investors (GROW).
I see three key reasons cryptocurrency values should increase during the next year. One is the likelihood that the Securities and Exchange Commission (SEC) will approve the launch of exchange-traded funds to allow trading of cryptocurrencies like Bitcoin on the spot market. A second reason is a possible recession or a weakened economy in 2024 that may increase cryptocurrency values as an alternative to traditional assets. A third reason is that when Bitcoin launched in 2009, its supply was designed to be limited to no more than 21 million coins.
Grayscale filed a registration statement on Form S-3 with the SEC on Oct. 19 to register shares of GBTC for listing on NYSE Arca under the same ticker. The shares would be issued on an ongoing basis, upon approval. That followed the DC Circuit Court of Appeals' August 2023 ruling in Grayscale’s favor of the company’s lawsuit challenging the SEC’s decision to deny conversion of GBTC to an ETF.
The Court ruled in favor of Grayscale, stating the investment firm “presented substantial evidence” that its plan is similar, across the relevant regulatory factors, to two bitcoin futures ETPs that the SEC approved for listing. In the absence of a “coherent explanation,” the unlike regulatory treatment of similar products was ruled unlawful, and the court vacated the SEC’s order.
Even though cryptocurrencies are difficult to value through traditional methods taught in business schools, BofA Global Research wrote in 2021 that Bitcoin is “the fuel” that keeps the decentralized cryptocurrency system moving. New coins must be issued constantly to “clear and settle” transactions on the blockchain, the investment firm noted.
