Grayscale Bitcoin Trust Trading at Negative Premium to the NAV

Sahaj  |  Apr 26, 2021, 6:30 pm
Grayscale Bitcoin Trust Trading at Negative Premium to the NAV

Grayscale Bitcoin Trust is being traded at a negative premium at -19 to the net asset value for the past two months. GBTC traded at a high premium in relation to the underlying, averaging a 15% premium since the inauguration of the fund.

Grayscale Bitcoin Trust Plunges to -19%

The high premium rate was basically due to Grayscale Bitcoin Trust being the only investment vehicle that was easily accessible to institutional investors.

The trust witnessed its premium plunges to a new all-time low on Thursday of -18.92% with the competitors in Canada rapidly taking up the market share and the United States exchange-traded funds just on acumination of approval, institutional interest for the investment product of Grayscale seems to be drying up.

The Purpose Bitcoin Exchange-traded fund of Canada for example hits $1.4 billion assets under management when BTC rose to its all-time high earlier this month. 

Despite being dominated by the much larger $32 billion assets under management by the Grayscale Bitcoin Trust, the trajectory of the Canadian fund is quite commendable.

In addition to this, the Securities and Exchange Commission of the United States also recently started its review of two of its United States Bitcoin Exchange-Traded Funds.

Resulting in Streamline Outflow of Fund

A major segment of the fund is starting to lose its market lead, and it is due to the high management fees charged by the fund to maintain the assets under its management.

Well, to be precise, the annual rate of management is 2%, and it is simply not possible to keep up with the rising competition in the market.

In accordance with the on-chain analytics site Glassnode, GBTC has sold over 2000 BTC which are worth approximately $105 million with the current prices roaming around $52k.

At the beginning of the month of April, it was announced by the trust that they are planning to transform GBTC into an exchange-traded fund.