Grayscale Bitcoin Trust Discount Hits Record at 26.5%
Analysts don't expect a spot bitcoin ETF conversion anytime soon, and in the meantime, investors in the GBTC fund are getting charged fees.
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 premium flipped to a discount last February, and the discount has steadily widened ever since due to several factors, including the launch of spot-based exchange-traded funds (ETFs) in Canada, which provided an alternative to those looking to invest in bitcoin through a stock market vehicle.
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.
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