Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin fund, has been hit hard by the cryptocurrency market crash. GBTC has been trading at a 17 percent discount since the beginning of the year. GBTC currently manages USD 27 billion in assets. The recent sell-off of Bitcoin (BTC) has had a greater impact on the GBTC share price. GBTC stocks are trading at a record discount to the underlying Bitcoin as the stock is down by 19 percent in 2022. GBTC’s share price has adjusted by a whopping 50 percent in the past three months. The correlation between Bitcoin and GBTC is getting worse.
On Tuesday, January 18, the price of Bitcoin (BTC) rose 1.6 percent, while the price of GBTC fell 6.4 percent on the same day. Brent Donnelly, president of Spectra Markets, said in a report provided to Bloomberg:
“GBTC keeps breaking hearts as the discount widens. GBTC is basically a binary bet on a physical ETF at this point. Tempting but tempting the way value traps can be tempting.”
In October 2021, Grayscale Investment LLC applied to the United States for the conversion of GBTC to Spot Bitcoin ETFs by the Securities and Exchange Commission (SEC). This move could help Grayscale secure more inflows from institutions. However, the SEC seems to be sticking to rejecting Spot Bitcoin ETFs because of its concerns regarding investor protection.
Have you also invested your money in crypto? What are your views on the current market discounts? To share your thoughts, comment below.
