There’s more frustration for Grayscale Bitcoin Trust (GBTC) investors as Grayscale’s flagship product is now suffering from a 20.53% discount, according to data from Glassnode.
The discount means the market price of GBTC shares is more than 20% lower than its net asset value (NAV). According to Grayscale’s website, each GBTC share currently amounts to 0.00093509 BTC.
Therefore, although the Bitcoin per share was worth $57.44 at market close on Monday, GBTC is actually trading at around $45.65.
GBTC has been trading at a discount since the end of February 2021. Source: Glassnode.
While Grayscale Bitcoin Trust has some similarities with a Bitcoin ETF, giving investors exposure to Bitcoin without the need to physically buy or hold the asset, the two are distinct products.
GBTC enables investors to trade shares in trusts holding large pools of Bitcoin, while a Bitcoin ETF offers an opportunity to invest in a fund that directly tracks the price of the underlying asset. (ProShares Bitcoin Strategy ETF, which began trading today, is linked to Bitcoin futures.)
Another important difference is that GBTC shares are created by Grayscale, the operator of the trust, and can be redeemed only after a set period of time. A Bitcoin ETF, however, allows for the creation and redemption of the shares at will, meaning that a premium or discount is normally unlikely if there’s enough liquidity.
Some notable investors in GBTC include Morgan Stanley, which is one of the largest investment banks in the U.S., value fund manager Bill Miller, and Cathie Wood’s investment house ARK Invest.
Historically, GBTC shares have traded at a hefty premium relative to the price of underlying Bitcoin. Things changed in February this year when GBTC’s shares turned negative for the first time since the fund’s inception in 2013.
Shares in Grayscale’s $32 billion Bitcoin Trust are trading at a discount to the price of Bitcoin for the first time in over five years.
Some analysts are concerned that this could depress the price of Bitcoin. If this trend continues, the worry is that Grayscale might stop buying up Bitcoin. And as one of the biggest Bitcoin buyers, a lapse in demand could sink its price.
Peter Schiff, a gold bug and noted crypto critic, said on Twitter: “If this persists the Trust will have no more inflows...
Since then, GBTC has been trading at a steep discount, resulting in losses for the trust’s existing investors due to the six-month lock-up for the initial investment.
As of Monday, October 18, Grayscale held $53.5 billion in assets under management, with as much as $39.7 billion, or about 73% of all funds, allocated to GBTC.
10/18/21 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
One possible way for Grayscale to reverse the current discount so that it trades closer to its net asset value (NAV) is to convert GBTC into a physical Bitcoin ETF. The firm has now made these intentions clear today after filing a conversion application today.
The New York-based firm first revealed such plans in April this year, with more reports on the matter coming over the past few days.
On Monday, Grayscale’s director of communications, Jennifer Rosenthal, confirmed that the firm is eyeing the move “as soon as there’s a clear, formal indication from the SEC.”
Today, I’m happy to confirm that @Grayscale *WILL* file for $GBTC to be converted into an #ETF as soon as there’s a clear, formal indication from the SEC.
“Once there’s official and verifiable evidence of the SEC’s comfort with the underlying Bitcoin market—likely in the form of a Bitcoin Futures ETF being deemed effective—the NYSE Arca will file a document called the 19b-4 to convert GBTC into an ETF,” added Rosenthal.
However, the wait for such evidence could take some time—under Chairman Gary Gensler, the SEC has shown few signs that it’s willing to approve an ETF tied to physical Bitcoin, something that Grayscale and many other players in the market prefer over futures-based Bitcoin ETFs.
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
Vice President JD Vance is set to headline the world's biggest Bitcoin conference, one year after President Donald Trump spoke at the event.
Bitcoin 2025's organizers announced the news Friday, noting that it would be the first time a vice president has ever headlined a crypto event to make public support of Bitcoin. A source familiar with the vice president's schedule confirmed to Decrypt that he will speak at the conference.
Last year, President Trump spoke at July's Bitcoin 2024 conference i...
Wellgistics Health, a publicly traded healthcare infrastructure firm, plans to accept payments in XRP and will add Ripple Labs’ token to its corporate treasury—aligning the business with a growing list of publicly traded companies that have embraced digital assets in the U.S.
Tampa-based Wellgistics plans to adopt XRP for payments infrastructure that will connect manufacturers directly to pharmacies, the company said Thursday in a statement. The firm's blockchain-powered platform, which is stil...
Bitcoin is coming to the drive-thru.
American fast food chain Steak ‘n Shake said Thursday it will begin accepting the world’s largest crypto at all of its U.S. locations starting May 16, giving its more than 100 million customers the option to pay for milkshakes and burgers in BTC.
“The movement is just beginning,” the company posted on X.
Unlike high-margin retailers, fast food chains run on thin margins and high volume, making Steak ‘n Shake’s Bitcoin rollout a real-world stress test for the...