Data tracked by Delphi Digital has disclosed that GBTC shares relative to the underlying cryptocurrency held in the fund have had their discount widened to 36.2% on September 30.
Grayscale Investment’s Bitcoin Trust (GBTC) has since its inception become the most widely tracked fund in the crypto market. Institutional investors have found it the most common destination to gain Bitcoin exposure without necessarily buying or taking custody of the crypto. According to recent market data, GBTC is still struggling to find a turning point despite the crypto market putting up a strong resistance to the bear market. Data tracked by Delphi Digital has disclosed that GBTC shares relative to the underlying cryptocurrency held in the fund have had their discount widened to 36.2% on September 30.
It can be recalled that in February last year, the GBTC shares fell into the discount category. Since then, it has traded lower than its Net Asset Value (NAV). Considering that institutional investors find the Trust as a preferred venue, the widening of the discount has been linked to the absence of institutional interest. This has, however, been said to be partly true. It is explained that persistent discounts can also be a result of the increasing availability of alternatives like Exchange-Traded Funds (ETF). This was confirmed by Andrew Krohn, an analyst at crypto research firm Delphi Digital in a letter to clients.
“Some suggest that the increasing discount illustrates subsiding institutional interest in bitcoin, while others point to a wider offering of ETFs or alternative vehicles for BTC investment,” wrote Krohn.
It is important to note that GBTC is a close-ended fund. This implies that all Bitcoin deposits remain locked forever. As of now, the fund holds about 3.3% of the total Bitcoin circulating supply, which is BTC 635,240 ($12 billion).
As required by its operation, accredited investors purchase GBTC shares at NAV by depositing either Bitcoin or USD. The shares, according to reports, can be sold in a secondary market after six months of the lock-in period. In this case, holders would have to just witness the value of their investment sink when the price falls within six months. Before 2021, the shares were trading at a premium.
In October last year, Grayscale filed with the US Securities and Exchange Commission (SEC) to convert its Trust into a spot-based ETF. This was, however, disapproved. According to the SEC, Grayscale failed to answer questions relating to preventing market manipulation.
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