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Grayscale’s GBTC Discount to NAV Breaks Records as Spread Widens by More Than 35%

Grayscale’s GBTC Discount to NAV Breaks Records as Spread Widens by More Than 35%

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Grayscale Investment’s Bitcoin Trust (GBTC) has fallen to new lows this week, as the bitcoin fund hit a record high of 35.18% against spot bitcoin prices. The GBTC spot discount has been underwater for a total of 577 consecutive days.

GBTC Discount to NAV Expands 35% – Fund Hits All-Time BTC Spot Price

Grayscale Bitcoin Trust (OTCMKTS:GBTC) is the oldest and one of the most popular bitcoin (BTC) trusts on the market. Recently, however, GBTC has suffered a discount compared to BTC’s spot market values. Unfortunately, GBTC has been trading at a discount instead of a premium since February 26, 2021, or about 577 consecutive days.

The current market cap of GBTC is $11.20, and according to filings with the Securities and Exchange Commission (SEC), the foundation holds 643,572 BTC. The metrics show that 643,572 BTC represents 3.065 percent of the 21 million bitcoin supply cap. GBTC’s 35.18% discount is the fund’s lowest ever compared to the spot price of BTC since the fund’s inception.

Many people believe that the discount of GBTC is due to the fact that there are several exchange traded funds today, and Grayscale’s efforts to turn GBTC into an ETF (exchange-traded fund) have so far failed. The US SEC rejected the company’s latest attempt in June, and Grayscale decided to sue the SEC over the rejection.

Trader and entrepreneur Bob Loukas discussed the GBTC situation on Saturday. “The greyscale bitcoin discount increased the record level by 35%, Loukas tweeted. “Oct 2020 at the blow-off point. Meh facilities. If BTC falls into the lower teens in the coming months, this [is] Good option. Must be ready to hold [the] the point where the redemption option unlocks the value. Regardless, there must be a discount limit, Loukas added.

Grayscale's GBTC Discount to NAV Breaks Records as Spread Widens Over 35%

GBTC approached a 30% discount last March, according to Glassnode statistics, at which time institutional investors rushed to acquire GBTC at a discount. Grayscale and its parent company Digital Currency Group (DCG) have also tried to correct the discount by using a share buyback.

Although institutional investors rallied earlier and Loukas explained that GBTC could be a good option, investors do not seem to be rushing towards GBTC’s discounted price. “Who thought they would be exposed [bitcoin] Through GBTC was it a good idea in the first place?” Tom Mitchelhill tweeted on Monday. “They’re literally selling it at a 36 percent discount and the market still refuses to touch it,” Mitchelhill added.

If the SEC approved GBTC’s move to the ETF, the discount to BTC spot prices could be removed. However, the US regulator has yet to approve a fund listed on the spot market, and the SEC has cited market manipulation as one of the main reasons for rejecting a fund with such elements. In the meantime, many traders sincerely believe that BTC spot prices in the minors are coming.

“Some of us have been talking about needing to see $8-12k BTC before we can reset and get another bull [underway]”, Twitter account Classical Ape tweeted last week. “Still not there. My company has this goal set for about a year +. And the GBTC discount is also a problem.”

What do you think about the GBTC trade at 35% off bitcoin spot prices this week? Let us know what you think about this topic in the comment section below.

Source: Bitcoin.com



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