Bitcoin’s Price Surges Above $60k! BTC Trust Could be Converted to BTC-settled ETF?

6:46 am, Mon, 18 October 21

To the delight of crypto enthusiasts supporting Bitcoin, the flagship digital currency has not only seen a price surge but has also crossed an important price region.  

Bitcoin’s price has rallied and BTC enthusiasts are optimistic to see further increase. With the news of BTC’s price increase, it has also been reported that Grayscale might be considering the conversion of its BTC Trust into ETF.

Whether this will work in favor of the flagship crypto asset or not, is yet to be seen in real life.

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Plans for the Conversion of BTC Trust to ETF

The price of the flagship digital asset, Bitcoin, has surpassed the $60,000 price mark. Despite seeing a slight price correction, it is now trading at $62,564 (at the time of writing).

Here is a graph by CoinGecko showing BTC’s price surge in the last 24 hours.

btc-graph-18-10-2021

Following this news, it has also been established that Grayscale might be planning to convert its BTC Trust into a physically-backed exchange-traded fund (ETF).

Grayscale is one of the most popular names in the market and is an institutional investment giant. The hint of Grayscale’s plans to convert BTC Trust into ETF came from Billy Silbert.

Silbert is the CEO of Digital Currency Group, the parent company of Grayscale. On October 17, Silbert indicated the possible initiative planned by the company. This new step has been planned to be taken by the company as the Securities and Exchange Commission (SEC) in the USA approved a BTC Futures ETF.

However, this has certainly given rise to a few questions and concerns among investors who hold their shares in Grayscale’s BTC Trust.

One of the questions asked by the investors was whether their investment would also be converted into ETF shares once the spot ETF is approved. However, this query has not been addressed by any professional at the moment.

It was also reported that Grayscale had planned to convert BTC Trust to ETF for quite some time, however, the only thing holding the company back was SEC’s pending approval for ETF. The U.S. Securities and Exchange Commission announced the acceptance of ProShares’ BTC ETF on October 15th.

The ETF approved exposes the investors to contracts that contemplate the price of BTC in the future that are cash-settled at the moment.

Will This Positively Influence Bitcoin?

The approval of the ETF is likely to be the primary reason for the price surge seen for Bitcoin in the past few weeks. The possibility of ETF’s approval was one of the main reasons why major investors invested in the flagship crypto asset.

Despite the positive influence on the largest digital asset, the fund is still criticized by a few analysts. This is because of its cash-settled structure, which should be Bitcoin-settled according to the analysts.

According to recent data, Grayscale holds $52.6 billion AUM (assets under management). 73% of the AUM is being held in the BTC Trust.

The data also points out that Grayscale holds around 3.3% of the total Bitcoin supply or approximately 620,000 BTC.

Therefore, since the approval of ETF has caused the price of BTC to surge in the past, it is likely to do so now as well. However, this is yet to be seen in real-time.

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