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In contrast, Grayscale has witnessed outflows of $37 million, which include its Bitcoin, Ethereum, and other tokens’ trusts. Grayscale’s efforts to convert its trust into ETF failed after the Securities and Exchange Commission’s rejection in June. In theory, SEC’s approval could have reset GBTC’s discount from current levels to zero, churning out profits for those who purchased the shares at cheaper rates. Previously, U.Today mentioned that Grayscale’s fund may not return to the «premium zone» as it is not as in demand as a tool of institutional exposure as it was before. But it seems that fresh funds can yet push the value of assets to NAV up. However, it should also be noted that while a rejection of the ETF filing is expected, approval is also a likely outcome.
How much bitcoin does GBTC own?
GBTC holds roughly 3.4% of the world's bitcoin and is owned by more than 850,000 U.S. accounts, according to Grayscale.
Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience. Bitcoin spot ETFs remain outlawed in the U.S. due to investor protection concerns, allowing countries such as Canada and Australia to gain first-mover advantage. Get the 5-minute newsletter keeping 75K+ crypto innovators in the loop. But the ETF may never happen — GBTC could theoretically continue to trend down while BTC chops at current levels (And Grayscale continues to charge 2% on the total value of the Bitcoin in the trust, not GBTC!). GBTC, which has $12B under management, has fallen 47% in the last 12 months. Get the 5-minute newsletter keeping 73K+ crypto innovators in the loop.
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More than 99% of them have been in support of the application, according to Grayscale. “But, as you know, the SEC continues to prohibit spot-based ETFs from coming to market, so the Grayscale team has been preparing for all possible post-ruling scenarios,” he said in the Monday letter. And be sure not to miss future OSL news and insights by following us on Twitter, Linkedin, Facebook, and Telegram. Feedback is important to us, and we’re keen to learn more about the types of insights and intelligence that matter to you most. ZKSpace Name Service , the first-ever Ethereum layer-2 domain name service, is scheduled to go live in October…
- However, a number of on-chain metrics are suggesting that bitcoin may soon bottom out based on historical data.
- After a six-month lockup, those investors could sell the GBTC on the open market and pocket the premium.
- Also, its shares have been trading at a discount since early March 2021.
- Authorities in Singapore are investigating troubled crypto hedge fund Three Arrows Capital, the country’s central bank announced Thursday.
- What was still a 6% premium to NAV in January 2021 when I last covered the Grayscale Bitcoin Trust is now a 30% discount.
Digital Currency Group, Grayscale‘s parent company, has attempted to reduce the discount by buying back GBTC shares. But, its efforts have been mired further by the launch of ProShares Bitcoin Strategy ETF that holds futures contracts. This has ended up dislocating GBTC‘s price further away from Bitcoin‘s spot price. Many factors attribute crypto market briefly surpasses $1 trillion as to GBTC‘s underperformance including rising competition from exchange-traded funds in Canada. Unlike GBTC, ETFs allow investors for Share Redemptions, a process through which a fund can destroy shares based on demand-supply dynamics. Grayscale is the world’s largest passive Bitcoin investment vehicle by assets under management.
GBTC Discount Hits All-Time Low as SEC Bitcoin ETF Decision Looms
If the latter were the case, it would be a negative as this would actually create pressure on the sellers as funds would see this as an opening for massive arbitrage in a cash-neutral long GBTC and short BTC trade. So, it will be in the best interest of GBTC investors now for the ETF filing to be rejected. The GBTC had been trading for a discount for the better part of a year but this discount has gotten significantly larger with the 3AC crash.
- Depending on who you ask (YCharts shows an all-time low of 34.08% coming on June 17), that’s a record low for the premium-turned-discount rate.
- The largest Bitcoin investment vehicle, the Grayscale Bitcoin Trust , is now trading at its biggest ever discount to the spot market.
- An example of one such scam is the QuadrigaCX exchange scandal of 2019.
- For instance, crypto investment funds have attracted a combined total of almost $414 million in 2022, according to the CoinShares’ weekly report.
These BTC are stored in the Grayscale fund, which essentially makes the Grayscale institution — rather than its investors — the actual owners of BTC. Since GBTC is a cryptocurrency the cryptocurrency market monthly review trust, you can buy its shares through your brokerage account. In doing so, you indirectly buy Bitcoin — avoiding the hassle of purchasing BTC through a crypto exchange.
How 3AC Affected The GBTC
While the firm remains buoyant on the outlook, GBTC’s performance has not escaped commentators, who point the finger at regulators for what they see as inaccurate risk assessment. With a legal battle between Grayscale and the SEC underway, cardano trading binance strategy it may actually be GBTC holders which continue to suffer the most as the discount continues to deepen. I/we have a beneficial long position in the shares of GBTC, BTC-USD either through stock ownership, options, or other derivatives.
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However, from a technical standpoint, according to crypto independent analyst IL Capo, BTC price is still at risk of falling towards the $14,000-$16,000 zone. Now, Grayscale has been working on a discount killer switch through its attempts to convert GBTC from a trust fundto an ETF tied to Bitcoin‘s price. If the SEC approves Grayscale‘s application, it would prompt the GBTC discount to reset from its current discount levels to zero. In a statement, BlockFi cited concerns about collateral haircut ratios.
GBTC discount hits all-time low. Sideways actions continue
The GBTC is currently trading at a 34% discount after 3AC collapsed. In my last article covering Bitcoin for Seeking Alpha, I made the case for why I believed the market sentiment was getting too one-sided. I still very much hold that view and believe that even if the cycle bottom isn’t in yet, Bitcoin has yet to benefit from a meaningful bear market rally since giving up $48k in March. After the liquidation of a top shareholder, I think GBTC shares at a 30% discount are a solid way to long Bitcoin for a potential rally in the spot price. What was still a 6% premium to NAV in January 2021 when I last covered the Grayscale Bitcoin Trust is now a 30% discount.
For example, according to CoinShares weekly report, crypto investment funds have attracted a total of about $414 million in 2022. In contrast, Grayscale has seen an outflow of $37 million, which includes its bitcoin, ethereum and other token trusts. For most of its existence, GBTC traded at a hefty premium to the price of bitcoin. But it began trading at a discount following the introduction of the first North American bitcoin exchange-traded fund in Canada in February 2021.
What Are Premiums and Discounts on GBTC Shares?
This website refers to trading of virtual assets, which may include digital securities and other complex financial products or instruments which may not be suitable for all investors. The value of a GBTC share hasn’t been growing at the same rate as its underlying asset. Even if you don’t have to pay a premium, you still won’t earn as much profit by buying shares as you will by owning Bitcoin directly.
