The Grayscale Bitcoin Trust or GBTC premium has finally hit the mark to echo the bullish sentiment in Bitcoin or BTC. Why? Because the premium version of the currency has continued to crash since May. Data from analytics have shown that the Grayscale premium stood at -5.88%. Although the last time, it was close to zero. Digital Currency Group’s flagship GBTC is currently trading at about 16.52%. it is below the bitcoin spot price. Hence, it marked the largest discount since Bitcoin hit its price decline in May. The grayscale Bitcoin Trust is offering exposure to 0.000938223 BTC for each share.
In other words, it has traded for around $42.32 at market close since August 18. However, with the help of the GBTC, the same amount of Bitcoin continues to trade at $35.31. So, it is a 16.52% negative spread between GBTC’s premium and other net asset values.
The Story To Slipping Above -6%
GBTC premium slips above -6%. It happened a week after bitcoin started a major prize breakdown. Although, right now it has started to abate. GBTC has always been the subject of doubt for many since Bitcoin took a 55% dip in values. It unlocked the GBTC shares. Hence, adding capable sleeping pressure to it.
It is no wonder that the price took a bit and a major discount offer started shelling out. Although such a premise is an issue by default. Nonetheless, the interest in bartering the value has surfaced this month. It not only added pressure to the system but also increased their Bitcoin exposure.
One can say that the trading price of the premium version has increased in step. It is close to the net asset value of the BTC holdings. Hence, it makes its way back to zero after staying in the negative marking. The unlocking has almost been completed.
It changed the story around Bitcoin price and removed all the pressure. An analyst commented after noticing the price point, “$GBTC premium has gone from -15% to -5% in 5 days. If $BTC can maintain these levels and have Grayscale premiums flip positive that will add fuel to this Bitcoin fire.”
So, one can see that it has received mixed perceptions. The CEO of the company, Sonnernshein spoke about his previous public statement. Earlier he wanted to turn GBTC and similar altcoins into exchange-traded funds (ETF) in the stock market.
He commented, “We are 100% committed to converting Grayscale Bitcoin Trust (symbol: GBTC), Grayscale Ethereum Trust (symbol: ETHE), and our other investment products into ETFs.” Although the United States has not approved any single Bitcoin ETF, Canada has given it a green light.
What Exactly Did Happen?
On Tuesday, Purpose’s assets jumped from $900 million to CAD 1.1 billion. It is the highest since May 13th. Since May, bitcoin has recovered itself. It managed to get $44,300 while Grayscale was slowly trying to catch up. Although the six-month lock-up slowed down the initial process, the holders could not redeem their shares in the stock market.
Therefore, the product started to trade at either a premium price point, or a discount compared to the bitcoin held within. The value of the GBTC premium has put a halt to the system of carrying trade because it made it unable to redeem the share. When they hit the premium, it ended up shorting the bitcoin futures. Although it was a risk-free plan that GBTC followed during trading at a premium.
Currently, the premium has a negative point. So, the incentive that one could get from the GBTC share is all gone. So, at the moment, the GBTC shares at a discounted price point are nothing but an easy solution for the investors. People who want to expose themselves to the bitcoin price through retirement should consider this option.
Although the learning curve of buying Bitcoin can make one wary of it. However, the GBTC has included many benefits of six months that one can redeem. Now, the GBTC holds a valuation of $29.3 billion in assets under management.
What Does The Stat Say?
The GBTC premium is traded at a discount of 6.6% net asset value currently. According to the situation in the stock market, it is the smallest margin one has noticed since June 22. The discount, however, got bigger to 15% in mid-June.
A spokesperson commented, “The discount seems to have narrowed due to a surge in buying interest in GBTC following weekend’s bitcoin price rally.” The bitcoin has successfully crossed over the 50-day resistance level at $35,000 during the weekend. Also, it climbed past $40,000 on Monday.
Although some investors have snapped up the GBTC premium shares hoping that the discount will cease to exist. Moreover, they hoped the revival in Bitcoin may take place. If that were to happen, the buyers may have taken benefits of the price gains on bitcoin. Moreover, they could have gained extra profit from the discount.