GBTC Trading At A 41% Premium, Signaling Huge Demand Among Institutional Investors


  • As more alternatives enter and become popular, the premium on GBTC is expected to decrease, regular change to affect it too
  • “Institutional/accredited investors can profit from this premium at the expense of retail investors…Time for a bitcoin ETF”

As Bitcoin price starts surging, so does the premium on the Grayscale Bitcoin Trust (GBTC). The premium that has been shrinking in 2019 has come back with hard now and as high as 41%.

While Bitcoin is currently trading at $10,135, GBTC is trading at $13.45. Bitcoin per share of GBTC is 0.00096677, providing mainstream institutional investors exposure to the leading cryptocurrency.

Back in April to July, when the price of bitcoin went to yearly high at $13,900, the premium peaked and yet again, as the price of the digital asset takes a hike, the premium is topping as well.

Given that investors are willing to pay such a high premium to get exposure to bitcoin, this premium over the market prices shows the interest of investors, especially institutions in Bitcoin.

A large chunk of these investors are millennials as revealed by the recent holdings’ analysis from TD Ameritrade and Charles Schwab. Bitcoin actually beats Netflix, Microsoft, and Alibaba as a popular investment choice among millennials.

Premium to Drop this Year?

However, as more alternatives make entry and become popular, this premium is expected to decrease. The regulatory change could make it so too.

“I'd be willing to bet that the GBTC premium will be crushed to single digits on the week of July 15, 2020 and October 21, 2020,” said Nik Carter.

He further shared that this demand is “based on the 12m premium trade (as opposed to just secular longs).” But with the maturation period likely to shrink to 6 months rather than 12, “this premium compression he said will happen much sooner,” likely April 2020.

Time for an ETF!

ShapeShift CEO Erik Voorhees also commented on this with a call for ETF,

“Is it fair to say that premium is the cost the SEC has imposed on investors by coercively preventing an ETF from coming to market? Which party is being helped by them, exactly?”

CEO of Blockforce Capital, Eric Ervin agrees with this as he said,

“By inhibiting competition and free markets (SEC) is enabling an unnecessary friction which taxes the individual public market investor over the institutional investor who is able to invest in the private market and sell in the public mkt to earn this premium.”

Grayscale Bitcoin Trust has about $3 billion assets under management and reported a record Q4 in 2019. The firm also charges 2% in fees while trading at a 41% premium.

“As a reminder, institutional/accredited investors can profit from this premium at the expense of retail investors…Time for a bitcoin ETF,” said Nate Geraci, host of ETF Prime.

Bitcoin (BTC) Live Price

1 BTC/USD =$56,813.5628 change ~ 4.07%

Coin Market Cap

$1.06 Trillion

24 Hour Volume

$25.68 Billion

24 Hour VWAP

$55.76 K

24 Hour Change

$2,314.13

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