Grayscale’s $2 Billion Bitcoin Investment Trust (GBTC) Drops 10% on Premium
The Bitcoin Investment Trust (GBTC), which is a publicly tradable Bitcoin instrument created by Grayscale Investment and a crypto fund, has seen its premium drop 10% last week.
After that, Tyler Jenks, the president of Lucid Investment, who worked as an analyst in the financial sector for more than 40 years, has determined that the decline in the premium was mostly led by a couple of major factors: either an interest in exchange-traded funds (ETFs) or a potential drop in the BTC price?
Jenks affirm that, in the past, you should buy immediately if the price is 10% down, but not now, as either Bitcoin is about to lose even more power or people will start to bet big on a new Bitcoin ETF.
The Relevance of the GBTC Premium
The GBTC was launched in 2016 and it has consistently seen substantial premium rates on its share price, which is set to represent 0.1% of the whole Bitcoin market. At the moment, the GBTC premium is being traded at $7.73 at both the traditional finance sector and OTC markets.
This market is important because it is the closest that investors have to an ETF right now, as they purchase the BTC from the Bitcoin Investment Trust and Grayscale with a premium. The main advantage when compared to the crypto market is that the structure of this market is considerably more traditional, so long-time investors are more likely to use it.
GBTC has the support of trusted service providers and all the bitcoin is stored on Xapo vaults to ensure that the company is not hacked and the clients are safe. This way, it can be a good investment for accredited investors that do not understand the crypto market well enough to participate in it indirectly.
Because of this, the decline in the price of this specific premium is definitely related to the investors losing interest in it, but are they uninterested in Bitcoin or in the GBTC specifically?
The ETF Option
A lot of people in the market believe that the premium dropped because people are waiting eagerly for the ETF. Recently, a large group of the UBS, the largest commercial bank in Switzerland, raised about $104 million USD for the launch of the first licensed crypto bank in the country.
Seba Chief Executive Officer Guido Buehler has affirmed that it is important that these alternatives exist for the clients who do not only want to invest in fiat currency. Alternatives like Seba, Bakkt and Coinbase Custody are also alternatives to the GBTC. While it is unlikely that the ETF will be approved so soon, everybody is eagerly waiting for it.