Grayscale Bitcoin Trust rises to a six-month high as tables turn in favor of Grayscale against SEC

• Grayscale Bitcoin Trust discount narrowed to 42%, marking a one-month high.
• The judges' panel presiding over the oral arguments questioned the logic behind the SEC's rejection of Grayscale's application.
• GBTC's share price rose to $12.90, rising by 9.6% in a single day, climbing to the highest point since September 2022.

Grayscale Investments is currently holding the spotlight thanks to the ongoing court proceedings against the Securities and Exchange Commission (SEC). Since filing the lawsuit against SEC last year, Grayscale has been waiting for the opportunity to prove itself right, and by the looks of it, that is exactly what is happening at the moment.

Judges doubt SEC's logic

The SEC had only given one reason each time when it came to rejecting Grayscale's application of turning GBTC into an ETF, even before the case reached the court hearing stage.

The regulatory agency states that the lack of federal oversight in the spot market makes a spot ETF susceptible to fraud and manipulation. Even in its opening brief, the SEC drew a comparison to Bitcoin Futures that are monitored by the Chicago Mercantile Exchange (CME).

The panel of judges presiding over the case questioned this, saying that the Commission needs to explain the distinction it drew between the Bitcoin Futures price and BTC spot price. Judge Neomi Rao said,

"It seems to me that ... one is just essentially a derivative. They move together 99.9% of the time. So where's the gap, in the Commission's view?"

This, along with other questions, has seemed to change the crypto community's opinion on who would emerge victorious from this case. As per Bloomberg Intelligence, the court is likely to overturn the SEC's decision, expecting a ruling in favor of Grayscale by Q2 or Q3 2023.

Grayscale Bitcoin Trust at its best in a while

Grayscale Bitcoin Trust share price at the time of writing traded at $12.90, rising by 9.6% by the closing bell on Tuesday. During the intra-day trading hours, the value of the share almost shot up by 14.61% before correcting. Regardless, GBTC's price managed to rise to a six-month high this week, as the last time the shares were around this price was back in September 2022.

GBTC 1-day chart

Following the optimistic outlook in the court proceeding, the GBTC discount also narrowed. At the moment, the discount to Net Asset Value sits at 42.11%, tightening to a monthly high. Further advances in favor of GBTC could result in a much more significant narrowing.