Grayscale’s GBTC Discount Closes to Zero for First Time Since February 2021 (2024)

FAQs

Is the GBTC discount gone? ›

“With spot bitcoin ETFs approved, Grayscale investors have now been simply freed to realize gains,” Stoychev told Bitcoin.com News. “Fortunately, that selling pressure has been absorbed by newer market participants and investors, as evident from the disappearance of the GBTC discount.

Grayscale's bitcoin fund (GBTC), the largest bitcoin investment vehicle, has seen its discount to net asset value (NAV) shrink to 0% for the first time since February 2021.

Fund Structure

The reason behind the discount was due to the nature of the fund. GBTC acted similar to a closed-end fund, which meant it lacked the inherent arbitrage mechanism that enables market makers to create or redeem shares at their discretion.

Accredited investors can create shares of GBTC at Net Asset Value (NAV) by giving USD or BTC to Grayscale. After a 6-month lock-up period, the investors can convert the trust shares into GBTC shares, which are then freely tradeable on the open market.

Ed: That's right. Importantly, in an​​ ETF format, shares of GBTC are expected to more closely track the price of Bitcoin, which means that any premium or discount on GBTC's share price is expected to disappear.

The GBTC discount or premium is driven by supply and demand dynamics in the market. A premium occurs when more investors are buying GBTC shares than there are shares available for sale, pushing the market price above the value of the underlying bitcoin held by the trust.

“Investors have been wanting to either take gains on their portfolio, or arbitragers coming out of the fund, or people unwinding positions that were part of bankruptcies through forced liquidation.” Market commentators argue that the bankruptcy of crypto giant FTX has played a significant role in the selloff of GBTC.

What Makes GBTC Different From Directly Owning Bitcoin? GBTC offers a way to invest indirectly in bitcoin through an exchange-traded fund and gain exposure to bitcoin price movements. Owning bitcoins directly means you actually own the individual tokens.

Bitcoin, in particular, has been known for wild fluctuations in price and volatility, making the decision as to whether to HODL it more challenging. Bitcoin Spot ETF approvals in January 2024 and following price increases make a strong case for holding.

GBTC - which in January received approval to convert from a trust to an ETF - currently has higher fees than its peers, one of the key factors in drawing investors to rival ETFs, Reuters has reported.

Why is GBTC down 10%? ›

Grayscale's Bitcoin Trust (GBTC), the second-largest spot bitcoin exchange-traded fund (ETF) by assets, lost 11% of its value Tuesday. But investors shouldn't worry, Grayscale said. The decline was largely expected, as 10% of the bitcoin held by the fund was spun off to create the Grayscale Bitcoin Mini Trust.

Grayscale has a proven track record in our industry, designing and creating invesment products for the digital economy. Grayscale's products operate within existing regulatory frameworks, and its hallmark products are the first SEC reporting funds in the industry.

Grayscale Bitcoin Trust Etf Buy Hold or Sell Recommendation. Etfs . USA . Given the investment horizon of 90 days and your complete indifference towards market risk, our recommendation regarding Grayscale Bitcoin Trust is 'Strong Buy'.

GBTC is sponsored by Grayscale, one of the the world's leading crypto asset managers with over a decade of experience operating crypto investment products.

It's the first cryptocurrency investment instrument to receive the status of an SEC reporting company. Each share in the GBTC corresponds to 0.001 BTC, i.e., 1 BTC is equivalent to 1000 shares in GBTC.

Given the current short-term trend, the stock is expected to fall -19.59% during the next 3 months and, with a 90% probability hold a price between $33.74 and $43.09 at the end of this 3-month period.

The Grayscale Bitcoin Trust price prediction for next week is between $ 75.48 on the lower end and $ 87.48 on the high end. Based on our GBTC price prediction chart, the price of Grayscale Bitcoin Trust will increase by 15.91% and reach $ 87.48 by Jul 08, 2024 if it reaches the upper price target.

10, 2024.

It's the first cryptocurrency investment instrument to receive the status of an SEC reporting company. Each share in the GBTC corresponds to 0.001 BTC, i.e., 1 BTC is equivalent to 1000 shares in GBTC.