GBTC's Discount Vanishing Act: Is This Real or Just Smoke and Mirrors?

The discount on Grayscale's Bitcoin Fund (GBTC) hit its narrowest point since July 2021 last Friday, dropping to just 8.6%. I've been watching this fund bleed for years, trading at a ridiculous discount since February 2021 that bottomed out at nearly 50% last December. What a joke that was.

Now everyone's getting excited because this massive discount is shrinking, all based on the hope that the SEC might finally approve their ETF conversion. I'm not holding my breath. These regulators have been playing cat and mouse with crypto for years.

Grayscale's been desperately trying to convert their closed-end fund into an ETF, and they've apparently been in talks with the SEC this week. They even want to change the ticker from GBTC to BTC - pretty presumptuous if you ask me. Sure, they met with the SEC to discuss "NYSE Arca, Inc.'s proposed rule change for listing and trading" their shares, but we've seen promising signals before that led nowhere.

Some financial lawyer named Scott Johnson revealed that Grayscale signed a service agreement with BNY Melon to act as an agent for GBTC. Great, another big bank getting their fingers in the crypto pie. They'll "facilitate the issuance and redemption of shares" - for a fee, of course.

GBTC sits on $30.45 billion in assets as of November 22nd. That's a massive honey pot of fees they're protecting. Don't think for a second they're doing this conversion for your benefit - this is about protecting their cash flow when investors have alternatives.

I've watched too many "positive developments" in crypto turn to dust to get excited about this discount narrowing. The big question is whether they can actually deliver or if this is just another false dawn that'll leave retail investors holding the bag.

The market is clearly pricing in approval, but the SEC has crushed crypto hopes plenty of times before. I'll believe this ETF conversion when I see it.