As the crypto market continues to bleed in recent days, Grayscale Bitcoin Trust (GBTC) shares have widened their discount to the underlying crypto held in the fund.
GBTC Premium at New Lows
According to recent data from Coinglass, the trust’s negative premium hit a new all-time low (ATL) as bitcoin struggles around the $35,000 mark. The GBTC has been trading on a steady decline since February last year, with the premium now sitting at 30%.
The Grayscale Bitcoin Trust is an investment vehicle provided by Grayscale Investments, one of the largest investment managers for institutions venturing into the cryptocurrency space.
The GBTC fund allows institutional investors to gain exposure to Bitcoin through a regulated traditional investment vehicle without directly buying, selling, or storing the asset.
Each GBTC share represents approximately 0.00095 BTC and tracks the market price of bitcoin. The shares have a minimum holding period of six months and a minimum investment threshold of $50,000, which makes it very difficult for retail investors to join.
However, with the recent decline in institutional demand for the cryptocurrency, the Trust’s shares premium has traded at a steep discount.
The premium represents the difference between the price of the underlying asset, Bitcoin in this case, and the value of the Trust’s shares.
The latest plunge in premium discounts can be attributed to several factors, including the launch of several spot exchange-traded funds (ETFs), providing institutional investors with an alternative to invest in Bitcoin via a regulated stock market vehicle.
Grayscale Bitcoin ETF not in sight
Last year, Grayscale applied to turn its Bitcoin Trust into a spot Bitcoin ETF, which would be backed by actual units of the digital assets and not just tied to it through derivative contracts.
However, the United States Securities and Exchange Commission (SEC) has still not shown any signs of approving a spot Bitcoin ETF, citing several regulatory concerns.
Just a few days ago, First Trust and Skybridge Bitcoin Trust joined the long list of Bitcoin ETF applications rejected by the SEC.
