- Last week, GBTC’s discount to NAV touched a new low of 36.2 percent which means that the trust is trading at an implied BTC price of just $12,500.
- Institutional investors still don’t find BTC attractive despite a steep discount owing to current macro headwinds.
The world’s largest Bitcoin trust aka the Grayscale Bitcoin Trust (GBTC) is once again in the news for trading at a significant discount of 35 percent from the BTC spot price. The Grayscale Bitcoin Trust provides institutional investors exposure to Bitcoin in a regulated environment.
As per data from Arcan analytics, it is far cheaper to gain exposure to BTC via Grayscale as against its spot price. In its latest report, Arcane Research wrote:
The GBTC discount reached a new record-low of 36% last week, an implied bitcoin price of $12,500. The current discount implies that GBTC will remain close-ended until January 2045.
Last week, GBTC’s discount to NAV touched a new low of 36.2 percent. It means that the trust is trading at an implied BTC price of just $12,500. This could be a good opportunity for investors if BTC resumes the uptrend once again.
However, the current steep discount on GBTC could be a concerning factor as well! This goes on to paint a clear picture that institutional investors don’t think now is a good time for investing in Bitcoin. Historically since 2015, the Grayscale Bitcoin Trust (GBTC) has been trading at an average premium of 20 percent above the spot BTC.
As of now, the Grayscale Bitcoin Trust (GBTC) manages 635,240 bitcoin valued at $12.8 billion as of the current spot BTC prices. It also has a total of 692,370,100 shares outstanding each backed by 0.00091723 bitcoin. Grayscale Securities, a new subsidiary of Grayscale Investments is currently managing the GBTC.
Why do investors avoid GBTC?
One of the major reasons why investors avoid Grayscale Bitcoin Trust (GBTC) is that it comes with a minimum investment of $50,000. Besides, it has a lock-in period along with a noteworthy management fee.
Also, institutional investors don’t seem curious enough to step into BTC at this point concerning the global macro headwinds. But if the Fed decides to pivot from monetary tightening anytime over the next year, we could see institutional money flowing back into Bitcoin.
On the other hand, institutional investors have been preferring exchange-traded products for seeking exposure to Bitcoin. Grayscale has been putting up all efforts to convert its Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF. However, the SEC has turned down the company’s application.
Grayscale Investments is now planning to sue the SEC over charges of “arbitrary and capricious” and “unfair discrimination”. On the other hand, the BTC price continues to stay calm above $20,000 levels despite strong volatility on Wall Street. The Bloomberg report notes:
The ratio between a gauge of expected volatility in Bitcoin and a similar measure for Treasuries has dropped to around a one-year low. The pattern between the the T3 Bitcoin Volatility and ICE BofA MOVE indexes reflects range-bound trading in the largest token since a June nadir despite major gyrations in bonds that act as a benchmark for global borrowing costs.
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