Grayscale bitcoin ETF price plunges after SEC denies spot fund

Yahoo Finance Live anchors break down the chart of the day.

Video transcript

BRIAN CHEUNG: I want to highlight now in our Chart of the Day what's going on with Grayscale Bitcoin Trust. This allows investors to get exposure to movement in the price of Bitcoin. And we've seen that the price has actually fallen after the SEC denied Grayscale's application for another product, a Bitcoin spot ETF.

Grayscale now suing the agency. We had Michael Sonnenshein, the CEO of Grayscale, talking to our morning show, saying that he feels it's inconsistent that the Grayscale company can offer this type of product, and that the SEC won't bless a product that's underlying-- that actually has Bitcoin underlying its product.

So, a very interesting story going on here, Akiko. But again, I want to remind our viewers that Grayscale is far from the only firm that's tried to actually get the SEC to approve a Bitcoin spot ETF. They've swatted every single one of those down.

AKIKO FUJITA: I mean, the counterargument could be-- is that it is consistent because spot ETFs have not been approved either way, right? I mean, we're talking about other ETFs that have underlying assets. But you're not investing directly in crypto.

BRIAN CHEUNG: Right, and I think what Grayscale might say is that while they do have a Bitcoin ETF that's exposed to derivatives, right, there are products where, actually, you can just bet directionally on whether or not Bitcoin is going to go up or down. But it's not actually an ETF that has Bitcoin underlying the actual product itself.

So I think what Grayscale might say is, well, isn't that the next evolution of this anyway? Are you being inconsistent by allowing us to have, first of all, a Bitcoin trust and then Bitcoin derivative products, but not Bitcoin itself? So I think this is going to be a very interesting battle. Not many firms would want to take on the SEC in litigation. But it seems like Grayscale Michael Sonnenshein feeling pretty confident they can take them on.

AKIKO FUJITA: Well, in many ways, it's sort of kind of a move, I'd imagine, to accelerate some kind of decision, because the uncertainty has certainly led to concerns among investors.

BRIAN CHEUNG: This is a long battle.

AKIKO FUJITA: If anything, it's sort of just seeking clarity.

BRIAN CHEUNG: It's a long battle.