Grayscale’s GBTC Bitcoin trust is one of the most well-known and old Bitcoin funds out there. However, the situation it’s currently in is not great. As Bitcoin’s price is dropping and the demand for the investment vehicle wavers, GBTC’s spread is increasing. It has recently hit a discount of 35.8%, with the trust trading below the tracking prices for more than 1.5 years.
Grayscale’s GBTC Bitcoin trust is in trouble
The GBTC trust tracks the spot price of Bitcoin, and in the last 1.5 years, it has not even been able to trade where the NAV should be and forget about premiums. Despite the major rallies in 2021, GBTC has been suffering from major discounts, and the spread is continuously increasing. The current trading price of GBTC is $11.39, and they hold a total of 643,572 Bitcoins, according to SEC filings.
One of the reasons behind GBTC trading might be the introduction of so many new BTC ETFs. At the same time, Grayscale has been trying to convert its fund to an ETF but has not received approvals so far. They even went to the lengths of suing the SEC over their decision, but that hasn’t gotten them any results as well.
Is this an opportunity?
Many investors are seeing this as an opportunity as well. Buying GBTC means acquiring Bitcoin at a 30% discount from the market rate, which is a lot. It can be a good option if someone is willing to hold until the fund’s NAV gets back on track. But the question is whether it will ever even happen. It has already been so long, so skepticism has a lot of room in the discussion.
The company is already trying to fix the discount problem by backing back its shares, but the gap only continues to widen. One of the fastest and easiest ways that the discount could be wiped away will be if the SEC approves the trust into an ETF. However, the commission has been very adamant about doing it and has also said that market manipulation is of the reasons they are refraining from approving a spot BTC ETF.
What are your thoughts as Grayscale’s GBTC Bitcoin trust trades at a 35% discount? And do you think it’s worth the risk to buy it at this price? Let us know in the comments below. And, if you found our content informative, do share it with your family and friends.