Last week, GBTC’s discount to NAV hit a new low of 36.2%. This means that the fund is only trading at an implied Bitcoin (BTC) price of $12,500. Institutional investors still find BTC unattractive despite a steep discount due to the current macro headwinds.
Grayscale Bitcoin Trust (GBTC) is 35% off!
The world’s largest Bitcoin trust, the Grayscale Bitcoin Trust (GBTC), is trading at a significant 35% discount from the spot price of BTC, as we reported on Kriptokoin.com. GBTC allows institutional investors to invest in Bitcoin in a regulated environment. According to data from Arcane Research, investing in GBTC is much cheaper compared to the spot price. The analytics firm wrote in its latest report:
The GBTC discount hit a new record low of 36% last week. At an implied Bitcoin price of $12,500. The current discount means GBTC will remain closed until January 2045.
Last week, GBTC’s discount to NAV hit a new low of 36.2%. This means that the trust is only trading at an implied BTC price of $12,500. If BTC continues its uptrend once again, it is possible that this will be a good opportunity for investors.
However, the current high discount in GBTC is also likely to be a worrying factor! This paints a clear picture where institutional investors think right now is not a good time to invest in Bitcoin. Historically since 2015, GBTC has been trading at an average premium of 20% over spot BTC.
As of now, GBTC manages 635,240 Bitcoins worth $12.8 billion at current spot BTC prices. It also holds a total of 692,370,100 shares, each backed by 0.00091723 Bitcoin. Grayscale Securities, a new subsidiary of Grayscale Investments, currently manages GBTC.
Why are investors staying away from GBTC?
One of the top reasons investors stay away from GBTC is that it has a minimum investment requirement of $50,000. There’s also a lockdown period, along with a notable administration fee. Also, institutional investors aren’t keen enough to step into BTC at this point regarding global macro headwinds. But if the Fed decides to roll back from monetary tightening any time next year, we could see institutional money flowing back into Bitcoin.
On the other hand, institutional investors prefer exchange-traded products to invest in Bitcoin. Grayscale is making every effort to convert GBTC into a spot Bitcoin ETF. However, the SEC turned down the company’s application. Grayscale Investments now plans to sue the SEC on charges of ‘arbitrary and capricious’ and ‘unfair discrimination’. On the other hand, despite the strong volatility on Wall Street, BTC price remains calm above the $20,000 level. The Bloomberg report states:
The ratio between the expected volatility indicator in Bitcoin and a similar measure for Treasury papers has dropped to a one-year low. The pattern between the T3 Bitcoin Volatility and the ICE BofA MOVE indices reflects range-bound trading in BTC since the lowest in June, despite large fluctuations in bonds that serve as a benchmark for global borrowing costs.
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