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.

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.

Grayscale confirms Bitcoin ETF plans

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.”

“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.