GBTC Discount Sees a Sharp Reversal as the Final Unlock Clears
This significant reversal in GBTC discount could possibly be also a “signal that investors are confident in BTC’s recent recovery,” as Bitcoin trades above $40,000 after eight straight green daily candles from $29,300 low earlier last week.
The ongoing discount on the Bitcoin Trust of the world’s largest digital asset manager, Grayscale, is seeing a sharp reversal after the final batch of GBTC unlocks have cleared.
As of writing, the negative premium on GBTC has been 5.69%, having recovered from last week’s more than 15%.
Back in the 2017 bull run, on May 31st, it was around the high of 132.6%
This year, the discount on GBTC first appeared in early March and went to -21.23% in mid-May after the shares started unlocking. Also, the launch of Bitcoin exchange-traded funds (ETFs) in Canada brought down the demand for the product, which charges a hefty 2% annual fee.
“Aggressive bounce in GBTC discount/premium after final unlocks,” noted Su Zhu, CEO, and co-founder of Three Arrrows Capital.
GBTC Discount or Premium to NAV
According to Delphi Digital, this significant reversal in GBTC discount could possibly be also a “signal that investors are confident in BTC’s recent recovery.”
Bitcoin is trading steadily above $40,000 after eight straight green daily candles, up from $29,300 from earlier last week.
This surge in prices has been coming as both spot and futures start to see buyers again.
In the options market, a large increase in BTC option volume and open interest has been recorded with the whale call buyer from Monday is back to buying over $50 million in options.
“We’ve seen an increase in traders taking directional bets in the market and an increase in activity a few days before July’s options expire.”
“With this revival in speculative activity and the trend reversing on short/mid time frames, realized volatility is on the rise too. As a result, implied volatility has jumped up as well, making options slightly more expensive across the board.”
Gold versus Digital Gold
Grayscale Bitcoin Trust (GBTC) currently has $25.8 billion in AUM, down from $50 billion in mid-April, around the peak of Bitcoin price, when it was on track to surpass the largest commodity ETF, SPDR (GLD).
The largest Gold ETF currently has $59.33 billion in assets, up from $56.15 billion at the end of March 2021 but down from the peak of $84.24 billion in early August last year.
With digital gold and gold moving in opposite directions, Mark Mobius, founding partner of Mobius Capital Partners, recently recommended buying the precious metal while being wary of Bitcoin.
In an interview with Bloomberg, Mobius advised “accumulating gold when it gets down” — having 5%-10% of an investment portfolio in the physical billion and not stocks or ETF. As for Bitcoin, he sees it breaking the low.
The 84-year-old Mobius doesn't see the enthusiasm around cryptos to grow in the current environment where governments are cracking down on it, starting with crypto exchanges.
“Right now, there's so much money sloshing around in the U.S.; people are getting checks in the mail from the government. They're adding to their bank accounts. They don't know what to do with their money. And when they hear these rumors… There's a lot of speculation about Bitcoin. And you hear about the billionaires that have been made with Bitcoin and the other cryptocurrencies. They get excited, and they go in. It's a matter of faith. So what I'm saying is that faith is probably going to begin to break down.”