Grayscale Bitcoin Trust (GBTC) Discount Signals A March to $100,000 per BTC: Report

“Bitcoin in 2021 is transitioning from a speculative risk asset to a global digital store-of-value,” states Bloomberg’s latest report titled “Bitcoin Making Gold Redundant?”

The leading cryptocurrency, a complement to the greenback, is the one that launched the digitization of the money revolution and is now in the process of replacing the old-guard reserve asset, gold, states the report by Mike McGlone, BI Senior Commodity Strategist.

“Funds are flowing to the benchmark crypto from gold, bonds, and stocks.” Bitcoin replacing gold is also happening; this replacement is actually accelerating in the investment portfolios.

As for Bitcoin sellers, there is no need to be worried about them as they appear similar to the 2017 start, it said. The one-year active supply is also at its lower level since 2010. Just below 40%, one-year active supply is far from the almost 60% reached in 2017 and 2013, roughly coincident with peaks in the Bitcoin price.

For long-term HODLers, the current price is actually not enough, which could keep the price bias tilted toward more appreciation.

The Only Way is Up

Currently, Bitcoin is in a $40k-$60k consolidation phase, with $100,000 seen as the next threshold for the price.

After hitting the $1 trillion market cap, Glone writes that the benchmark crypto asset is ripe to stabilize for a while, with $40,000 marking initial retracement support.

The upward trajectory is expected to stay the course on rising demand vs. declining supply and an increasingly favorable macroeconomic environment.

This means $100k can come further propelled by the Grayscale Bitcoin Trust discount, which has today fallen to a record low of -11.92%.

McGlone notes in the report that the Grayscale Bitcoin Trust closed at its steepest discount ever while December CME-traded Bitcoin futures settled about 20% higher, indicating capitulation selling. This disparity offers a great arbitrage opportunity.

The steepest discount on GBTC is a rare occurrence which historically means improving the price outlook for the crypto. Given that the trust represents about 4% of the total Bitcoin market cap now vs. closer to 1% in 1Q17, the trust has a greater influence on the underlying Bitcoin market.

Moreover, sharp reductions in GBTC premium have often marked bottoms in BTC price. Also, now there is an increasing probability of exchange-traded funds (ETF) in the U.S. on the back of the launches in Canada, which is adding pressure to the trust price, but “we see sustaining the upward trajectory as the more likely outcome,” says the report.

Overall, “Unless favorable technical, fundamental, macro and microeconomic trends reverse, Bitcoin should be set to keep appreciating.”