23.01.2022, 15:54

GBTC premium falls 30% to an all-time low

As the crypto market has continued to be bathed in blood over the past few days, Grayscale Bitcoin Trust (GBTC) stock has extended the discount associated with the underlying cryptocurrency held in the fund.

GBTC premium hits new low

Follow Data Recently from Coinglass, Grayscale’s current negative premium hit a new all-time low (ATL) as Bitcoin struggled for $35,000. GBTC has been steadily declining since February 2021, currently at a premium of 30%.

Grayscale Bitcoin Trust is an investment vehicle offered by Grayscale Investments, one of the largest institutional investment managers venturing into the crypto space.

GBTC enables institutional investors to access Bitcoin through a managed traditional investment vehicle without the need to directly buy, sell or store the asset.


Grayscale Premium | WOMENSource: Coinglass

Each GBTC share represents approximately 0.00095 BTC and tracks the market price of Bitcoin. It has a six-month minimum holding period and a minimum investment threshold of $50,000, making it very difficult for retail investors to get started.

However, given the recent decline in institutional demand for the cryptocurrency, GBTC has been trading at a heavily discounted rate.

The premium represents the difference between the price of the underlying asset – in this case Bitcoin – and the share value of GBTC.

The recent drop could be attributed to a number of factors, including the potential launch of some exchange-traded funds (ETFs) in the cash market, offering institutional investors an alternative to investing in Bitcoin through a regulated exchange vehicle.

Grayscale Bitcoin ETF still not accepted

Last year, Grayscale applied to convert its Bitcoin Trust into a spot Bitcoin ETF, which will be backed by physical units of digital assets and not just linked by derivative contracts.

However, the US Securities and Exchange Commission (SEC) has yet to take action to approve a spot Bitcoin ETF, citing regulatory concerns.

Just days ago, First Trust and Skybridge Bitcoin Trust joined the long list of spot bitcoin ETF proposals rejected by the SEC.