BTC is currently priced at about 6 percent below the previous day’s price and 20.78 percent below last week’s price. Currently, GBTC is selling at a discount of almost 3%, and a discount of this size with a premium is a buying warning on the opposite. The only two times that there were discounts in GBTC, there was a 2x and a 4x rally in the subsequent months, respectively. It is assumed that the same could be the case this time around, however, post further corrections in the short term.
The above chart shows the nett asset value premium or the GBTC discount, and the crucial question here is, is it likely that history can repeat itself? While there is a recent Bitcoin ETF in Canada giving retail investors an opportunity to invest in Bitcoin, the GBTC premium also has an impact as the discount provides a profitable opportunity for institutions to invest. Another consideration to remember is that Bitcoin markets have been crowded in the last few weeks and trading at discount, GBTC signals a further decline in Bitcoin’s price in the foreseeable future.
While competitors are selling similar products to GBTC, Grayscale’s AUM is challenging competitors. Many Bitcoin ETFs have been released in the last two weeks, there are many options for institutions to join, providing a wide variety of features such as reduced prices, but Grayscale’s BTC offers free Bitcoin via discount.
Canadian trusts have also had discounts, but because of the uncertainty, it is not the perfect option for any organisation. Institutional investors purchased GBTC instead of Bitcoin to protect against the uncertainty of Bitcoin on-site or futures markets. When the price of Bitcoin was higher, there was a premium on GBTC, but that was replaced by a discount when the price fell. At present, even at the $46,000 mark, GBTC is trading at a discount, and this may lead to a further decrease in Bitcoin’s price as the discount increases.
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