Grayscale Discount Might Signal Start of Fresh Bitcoin Rally, Bloomberg's McGlone Says

Far from a signal of distress, a negative level on the "Grayscale premium" might signal a market reset for a fresh bitcoin rally.

Mar 4, 2021 at 2:41 p.m. UTC
Updated Sep 14, 2021 at 12:21 p.m. UTC

Bloomberg Intelligence analyst Mike McGlone, who correctly predicted bitcoin's ascent this year to a price above $50,000, says recent market indicators suggest $100,000 could be the next threshold.

McGlone wrote in a March outlook report that a recent drop below zero in the so-called Grayscale premium – a closely watched metric in cryptocurrency markets – could signal that last week's swift 21% sell-off to about $43,000 might have reset the market for a fresh run. As of Thursday, prices had rebounded to about $50,000.

The Grayscale premium refers to the difference between price of bitcoin as implied by cost of shares in the publicly traded Grayscale Bitcoin Trust (GBTC), and the price of bitcoin as traded on cryptocurrency exchanges. Historically, it's been positive. For a story on the Grayscale premium flipping negative, go here. (Grayscale is a unit of Digital Currency Group, which also owns CoinDesk.)

  • "Bitcoin's end-of-February price disparities on U.S. regulated exchanges portend a firming price foundation, if history is a guide," McGlone wrote.
  • "Indicating capitulation selling, the Grayscale Bitcoin Trust closed at its steepest discount ever, while December CME-traded bitcoin futures settled about 20% higher.
  • "Normal maturation and increasing market depth will narrow wide price disparities, and we view the end-of-February extremes as an indication of just how nascent bitcoin still is."
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