Grayscale Investment’s Bitcoin Trust (GBTC) hit a new low this week as the bitcoin fund hit a 35.18% low against the bitcoin spot price The decline comes as GBTC’s discount to the spot has remained underwater for a total of 577 consecutive days.
GBTC’s discount to NAV widens 35% – fund hits record low againstBTC
Grayscale Bitcoin Trust (OTCMKTS:GBTC) is the oldest and most popular and one of the most popular Bitcoin (BTC) funds on the market today. However, recently GBTC has suffered from a discount compared toBTC, suffering from a discount compared to the spot market value of BTC. Unfortunately, GBTC has been trading at a discount rather than a premium since February 26, 2021, or approximately 577 consecutive days.
The current pre-market value of GBTC is $11.20, and according to Securities and Exchange Commission (SEC)filingsGBTC is $643,520. 643,572 BTCheld by the Trust. According to the index, 643,572 is equivalent to 3.065% of the supply cap of 21 million bitcoins of BTCThe 35.18% discount of GBTC tois the Fund’s all-time low against the spot price value of BTCsince the Fund began. It is the Fund’s all-time low against the spot price value of BTC
The discount to GBTC is the result of several exchange-traded funds currently in existence and the gradient in the market to convert GBTC into an ETF (exchange-traded fund). Many believe it stems from the fact that Grayscale’s efforts to turn GBTC into an ETF (Exchange Traded Fund) have so far failed. The SEC rejected the company’s latest attempt in June, and Grayscale has decided to sue the SEC over the rejection.
Trader and entrepreneur Bob Loukas discussed the GBTC situation on Saturday.” Grayscale Bitcoin discount widens record 35%,” Loukas tweeted.” At Oct 2020 blow-off point. the Meh institution. If.BTCfalls to lower teens in the coming months, this [is] a good option. Redemption options must be willing to hold to a [point] that releases value. Still, it has to be a discount limit,” Loukas added.
GBTC approached a 30% discount last March, according to Glassnode statistics, and at the time institutional investors were flocking to acquire GBTC at a discount. Grayscale and its parent company, Digital Currency Group (DCG), are also attempting to modify the discount by leveraging share buybacks.
In the past, institutional investors have gathered and Loukas explained that GBTC could be a good option, but investors do not seem to be rushing toward GBTC’s discounted price.” Who thought it was a good idea to get (bitcoin) exposure through GBTC in the first place?” Tom Mitchelhill tweetedon Monday.” They are literally selling it at a 36% discount and the market still refuses to touch it.” Mitchelhill added.
If the SEC approves the transfer of GBTC to the ETF, the discount tocould eliminate the discount to the spot price of BTCdiscount to the spot price of BTCcould be written off. However, U.S. regulators have yet to approve spot market-listed funds, and the SEC cites market manipulation as one of the main reasons for rejecting funds with such an element. Meanwhile, many traders believe wholeheartedly in theBTCspot price; they sincerely believe that a BTC spot price in the low teensis coming, and they are willing to accept the possibility of a
BTC spot price in the high teens
, which would be a good thing for the U.S. market.
“Some of us are talking about needing to see $8-12KBTC before we can reset and get a new bull [underway],” Twitter account Classical Ape tweeted last week. “Not there yet. My company has been setting this goal for about a year or more. Oh, and the GBTC discount is also an issue.”
Image Credits: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: Rcc_Btn / Shutterstock.com, ycharts.com.