GBTC Discount Starts Making A Recovery After Crashing to a Record Low of Almost 12%
GBTC share prices have also been taking a beating along with the sell-off in the traditional market while the price of Bitcoin continues to consolidate in the $40k-$50k range.
Grayscale Bitcoin Trust has been trading at a hefty discount, nearly 12%, before recovering some to just under 3%.
It was on Friday that the GBTC premium took a sharp drop falling to its record low of -11.92%, as per Glassnode. According to CMS Holdings, this discount is just “some people took some pain and got out and took the L.”
Back on Dec. 22nd, this premium was as high as 40%, and from there, it only went down and during the last week of February was when it ventured into the negative territory.
The recent GBTC discount also coincides with the US equities sell-off. Interestingly while GBTC has been crashing, the price of spot Bitcoin has been consolidating between the $40k-$50 range. Even MicroStrategy shares have been getting sold off, and so have been Tesla and many other tech stocks. ParabolicTrav said,
“US markets are basically right at the bottom now, so the discount is reflective of the “panic” selling we just saw in global markets. Spot BTC barely affected by the sell-offQ, league of its own.”
Though the premium went to its lowest level ever, it wasn't the first time they went negative. As a matter of fact, these discounts have marked Bitcoin bottoms historically.
As we reported, Bloomberg strategist Mike McGlone sees this discount signaling Bitcoin’s march to $100k. “The steepest ever Grayscale Bitcoin Trust (GBTC) discount is a rare indication of an improving price outlook for the crypto, if history is a guide,” he wrote. “Sharp reductions in the GBTC premium have often marked bottoms in Bitcoin,” added McGlone.
At the same time, December CME-traded Bitcoin futures settled about 20% higher, “a tailwind for the underlying crypto.”
Moreover, the increasing probability of exchange-traded funds (ETF) in the U.S., on the back of the success of the ones launched in Canada, is adding pressure to the trust’s price.
Eventually, as CMS Holdings said, Grayscale is also expected to be turned into an exchange-traded fund (ETF) or get “turned into physical BTC.” Currently, there is no redemption program with GBTC. Still, given that GBTC represented about 4% of the total Bitcoin market cap now versus Q1 of 2017 when it was just 1%, it has a greater influence on the underlying Bitcoin market.
Meanwhile, much like the premium on GBTC, its shares haven’t been having a good time as it crashed nearly 35% from its Feb. 19 ATH. As of writing, GBTC share was trading at $43.8. Currently, the world’s largest asset manager Grayscale Investments holds 655.54k BTC, representing just over 3.5% of Bitcoin’s circulating supply.