Shares of Grayscale Bitcoin Trust, the world’s largest Bitcoin fund, rose nearly 10% this Tuesday after Grayscale’s lawsuit against the Securities and Exchange Commission kicked off in court. Grayscale Investments, the company behind this fund, has been trying to convert Grayscale Bitcoin Trust into an exchange-traded fund for years. Still, the Securities and Exchange Commission decided to disallow the conversion of the Grayscale Bitcoin into an ETF.
Because of this, Grayscale sued the SEC denying its application, and for now, everything indicates that its request could bear fruit. Judges for the U.S. Court of Appeals for the District of Columbia Circuit sounded very sceptical of arguments made by the Securities and Exchange Commission justifying its decision to disallow the conversion. It is important to say that the SEC has already approved ETFs that hold Bitcoin futures, and judges asked what data the agency wanted Grayscale to show to prove that surveillance of the futures market was a sufficient proxy for surveilling that of spot Bitcoin.
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According to the SEC, the proposal did not meet anti-fraud and investor protection standards. Still, Grayscale’s lead counsel told the court that a spot bitcoin ETF would “better protect investors” because it would benefit them from oversight based on the surveillance agreements set up with the Chicago Mercantile Exchange, where bitcoin futures trade.
“In approving the futures ETPs, it seems to be that the commission has to have necessarily drawn the conclusion that this arrangement would prevent fraud and manipulation on the underlying spot market because they recognize the relationship between the two markets, and they approved the rule for the futures product,” said Judge Neomi Rao, while questioning the SEC.
After Tuesday’s oral arguments, the court could make its decision as soon as this summer, and Grayscale’s chief executive officer, Michael Sonnenshein, said that he anticipates the court will rule in Grayscale’s favor.
Technical Analysis Of GBTC
Shares of Grayscale Bitcoin Trust are showing bullish momentum this trading week, and if the price advances above $14, the next target could be resistance at $15. The price has also exceeded the 10-day moving average, indicating that shares of GBTC could advance even more.
Despite this advance, investors should keep in mind that shares of Grayscale Bitcoin Trust are also in correlation with Bitcoin, and if the price of Bitcoin falls below $12,000, we could probably see shares of GBTC at a lower price level than the current price. The important support level stands at $11, and if the price breaks this level, we could see GBTC at $10 or even below.
