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Grayscale’s GBTC Discount to NAV Breaks Records as Spread Widens by More Than 35%

Grayscale's GBTC Discount to NAV Breaks Records As Spread Widens by More Than 35%

Grayscale Investment’s Bitcoin Trust (GBTC) has dropped to a new low this week as the bitcoin fund tapped a record 35.18% low against bitcoin spot prices. GBTC’s discount to spot has been underwater for a total of 577 consecutive days.

GBTC Discount to NAV Widens by 35% — Fund Reaches an All-Time Low Against BTC Spot Price

The Grayscale Bitcoin Trust (OTCMKTS: GBTC) is the oldest, and one of the most popular, bitcoin (BTC) funds on the market today. However, in recent times GBTC has been suffering from a discount compared to BTC’s spot market values. Unfortunately, GBTC has been trading at a discount rather than a premium since February 26, 2021, or for roughly 577 straight days.

GBTC’s current pre-market value is $11.20 and according to Securities and Exchange Commission (SEC) filings, there’s 643,572 BTC held by the trust. Metrics indicate that the 643,572 BTC equates to 3.065% of the 21 million bitcoin supply cap. GBTC’s 35.18% discount is the fund’s all-time low against BTC spot price values since the fund started.

Many people believe GBTC’s discount derives from the fact that there are several exchange-traded funds now, and Grayscale’s efforts to transform GBTC into an ETF (exchange-traded fund) have failed so far. The U.S. SEC rejected the company’s latest attempt in June, and Grayscale decided to sue the SEC over the rejection.

Trader and entrepreneur Bob Loukas discussed the GBTC situation on Saturday. “Grayscale bitcoin discount widened record 35%,” Loukas tweeted. “At Oct 2020 blow-off point. Meh institutions. If BTC falls to lower teens coming months, this [is] a good option. Have to be willing to hold to [the] point where a redemption option unlocks value. Even so, must be limit to discount,” Loukas added.

Grayscale's GBTC Discount to NAV Breaks Records as Spread Widens by More Than 35%

GBTC neared a 30% discount last March according to Glassnode statistics, and at the time institutional investors were flocking to acquire GBTC at the discount. Grayscale and its parent company Digital Currency Group (DCG) have attempted to fix the discount as well, by leveraging share buybacks.

While institutional investors flocked in the past and Loukas explained that GBTC could be a good option, investors don’t seem to be rushing toward GBTC’s discounted price. “Who thought gaining exposure to [bitcoin] through GBTC was a good idea in the first place?” Tom Mitchelhill tweeted on Monday. “They’re literally selling it at a 36% discount and the market still refuses to touch it,” Mitchelhill added.

If the SEC approved GBTC to transfer into an ETF, the discount to BTC’s spot prices could be erased. The U.S. regulator, however, has yet to approve a spot market exchange-traded fund and the SEC has cited market manipulation as one of the main reasons to reject a fund with such elements. In the meantime, many traders wholeheartedly believe BTC spot prices in the lower teens are coming.

“Some of us have been talking about needing to see $8-12K BTC before we can reset and get a new bull [underway],” the Twitter account Classical Ape tweeted last week. “Still not there yet. My firm has had this target set for about a year+. Oh, and the GBTC discount is an issue too.”

What do you think about GBTC trading at a 35% discount from bitcoin spot prices this week? Let us know what you think about this subject in the comments section below.

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Author: Jamie Redman

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