Grayscale Bitcoin Trust's (GBTC) shares have widened their discount relative to the underlying cryptocurrency held in the fund, reaching a record of 26.5% on Wednesday.
GBTC has been the preferred venue for institutional investors to gain exposure to crypto without having to purchase bitcoin directly, but the shares have traded at a steep discount over the past year as demand for the product shrank. (Grayscale Investments, which manages the trust, is a unit of Digital Currency Group, which also owns CoinDesk.)
The persistent discount could also be due to investor skepticism regarding Grayscale's plan to convert the fund into a spot-based ETF. Some analysts don't expect a conversion anytime soon, and in the meantime, investors are getting charged fees.
The U.S. Securities and Exchange Commission hasn't approved a spot bitcoin ETF.
"There's still no way for bitcoin to ever leave GBTC, which means it should continue to trade with a substantial discount to reflect that illiquidity," Dave Nadig, director of research and chief investment officer at ETFTrends.com, wrote in an email to CoinDesk.
The recent crypto sell-off also may have contributed to a wider GBTC discount. Bitcoin is down roughly 37% from its all-time high of nearly $69,000 in November, although the cryptocurrency's price appears to be stabilizing at about $42,000 at the time of writing.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.