Following the applications for Bitcoin spot ETFs by Wall Street giants last month, Bitcoin also welcomed the first leveraged Bitcoin futures ETF in the United States at the end of the month, proposed by Volatility Shares. Volatility Shares stated that the application for the leveraged Bitcoin ETF – BITX was not rejected by the U.S. Securities and Exchange Commission (SEC), so it was officially launched on June 27.

Grayscale is dissatisfied with the differential treatment

Grayscale Investments, an asset management company that has applied to the SEC many times to convert its Bitcoin Trust Fund (GBTC) into a spot ETF but has been repeatedly ignored and rejected, is quite dissatisfied with the SEC's approval of the leveraged Bitcoin ETF.

In a letter submitted to the District of Columbia Court of Appeals on Monday, Grayscale lawyer Donald Verrilli stated that leveraged Bitcoin exchange-traded funds are clearly a "higher risk investment product" and criticized the SEC's move as completely unreasonable.

The SEC's decision to allow open trading of leveraged Bitcoin futures exchange-traded products shows that the SEC is still biased in dealing with spot Bitcoin exchange-traded products and treats them differently from Bitcoin futures exchange-traded products.

The lawsuit between the SEC and Grayscale over "GBTC conversion to Bitcoin spot ETF" has been ongoing since last year. Donald Verrilli has previously put forward the core argument in court, arguing that Grayscale has signed a futures ETF supervision agreement and the SEC can supervise ETF products well; at the same time, Grayscale's launch of the Bitcoin spot ETF is to "better protect investors."

Grayscale clarified its position on Twitter, saying that they are not saying that such products should not exist. On the contrary, they want to tell the market about the contradiction of the SEC. The SEC cannot refuse to approve spot products without sufficient reasons, but allow leveraged futures products to be traded at the same time.

Now backed by many institutions

Now, as giants BlackRock and Fidelity began submitting applications to the SEC to launch a Bitcoin spot ETF in mid-June, GBTC's daily trading volume soared to nearly US$80 million just five days after BlackRock submitted its application, an increase of about 400%.

According to Coinglass data, the current total holdings of Grayscale Funds are US$19 billion, and the negative premium of GBTC has narrowed to 27.49%, recovering about 21.13% from the highest negative premium rate in December 2022 (when the negative premium reached 48.62%).

It is understood that the GBTC issued by Grayscale began to have a negative premium at the end of February 2021, and the ratio continued to expand after entering the bear market in 2022. It was not until this year (2023) that the negative premium gradually stabilized. Many well-known investors in the market are optimistic about the subsequent development of GBTC and believe that Grayscale is expected to win the lawsuit with the SEC. Including "Female Stock God" Cathie Wood has repeatedly praised the future growth of GBTC and looks forward to a return to a positive premium. ARK Investment, which she manages, is also the largest holder of GBTC.

GBTC Negative Premium Rate