Bitcoin (BTC)Crypto News

Grayscale Bitcoin Trust Achieves Record Discount Of 21.3%

The central theses

  • Grayscale Bitcoin Trust (OTC 🙂 closed last week on a 21.3% discount.
  • Grayscale’s flagship product GBTC has seen record discounts.
  • At the end of last week, a GBTC share was priced at $ 34.42, which is 21.3% below its underlying value.
  • The rising discount on GBTC could indicate weaker institutional interest in the asset class.
  • At last week’s closing price, Grayscale’s GBTC was trading at a discount of 21.3% on its base value.

GBTC achieves record discounts

Grayscale’s flagship product has seen a record discount. GBTC’s last recorded price is 21.3% lower than its underlying price which is being held against it. According to Grayscale data, on December 17, 2021, the price of a GBTC share was $ 34.42 while its net asset value was 0.00093 BTC, which is roughly $ 43.77.

GBTC previously traded at over 20% discount in May, but the 21.3% discount is a record low. Grayscale’s GBTC product allows investors to invest in Bitcoin through a private trust fund. It was founded in September 2013, has assets of $ 30.3 billion, and issues regulated stocks that track the price of Bitcoin.

Due to the structure of GBTC, the shares often trade at a premium or a discount. However, the current discount of 21.3% is the largest in GBTC’s eight-year history. The discrepancy between the underlying value and the market price of GBTC is a helpful indicator of the environment of the top crypto asset.

The rising discount on GBTC could potentially indicate weaker institutional interest in the asset class. The record low comes as Bitcoin struggled to maintain its strength in the market. It is currently trading at around $ 46,000, down about 33% from its All time high dated November 10 of $ 69,044.
Grayscale Bitcoin Trust Achieves Record Discount Of 21.3%, Crypto Trading News
Although GBTC has long been a critical investment vehicle in the crypto space, the product has several drawbacks, including a six-month lock-up period and a 2% annual management fee. Some recently launched Bitcoin futures ETF products offer institutional investors the ability to invest at lower cost with no lock-up period.

For example, the ProShares Bitcoin Strategy ETF (NYSE :), which recently launched the first Bitcoin futures ETF in the US, charges a fee of just 0.95% annually.

Amid increasing competition from ETFs, Grayscale has filed with the Securities and Exchange Commission to convert GBTC into a spot ETF. Grayscale hopes that by switching to an ETF product, it will offer better pricing by removing the discrepancies between GBTC and Bitcoin’s spot value.

If approved, Grayscale’s proposed fund could take first place from Bitcoin ETF that will be listed on the US stock market. However, there is a reasonable chance the SEC will prevent Grayscale from making the move anytime soon. SEC chairman Gary Gensler has stated on multiple occasions that the agency does not endorse a spot Bitcoin ETF product.

Source: Crypto News Deutsch

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