It has been a quiet weekend as Bitcoin tries to break over the $20,000 barrier zone. The Grayscale Bitcoin Trust's (GBTC) (1) discount reached a record high, which may be another sign of waning institutional interest in the leading cryptocurrency.
What do the numbers mean?
The greatest discount in the history of the Bitcoin fund, at 36.7% off of spot BTC values, was being traded at the time. The rising numbers may also indicate that participants are considering other BTC investment options, like exchange-traded funds (ETFs). As recently reported by Arcane Research (2), There are compelling reasons to buy GBTC (3) at the current discounts. Discounts haven't shrunk, which indicates that Wall Street is either ignoring BTC prospects or hesitating to make a long-term bet on BTC (4). The discount for GBTC can get smaller as sentiment strengthens. In response, GBTC may take up part of BTC's demand, limiting some of its potential rises.
GBTC is now the biggest Bitcoin fund, holding 635,240 BTC, or almost $12 billion. That represents more than 3.3% of the cryptocurrency's available supply. It has been trading at a 20% positive premium since 2015. However, last year the premium turned negative. Throughout the time, the discount was, on average, 19%. It's important to note that the gap appeared following the February 2018 Toronto Stock Exchange debut of the Purpose Bitcoin ETF.
Any Threats ?
A spot ETF has faced hostility from the SEC. The commission just denied WisdomTree's request for one in the US. Large players are swarming into other Bitcoin-linked funds that have just entered the market. In the meanwhile, Grayscale sued the SEC over the conversion of GBTC into a spot-based Bitcoin ETF. The asset management had asserted that the regulatory body handles spot Bitcoin ETPs especially harshly and that its punishment for doing so is arbitrary, capricious, and discriminatory.