Grayscale’s $32 billion Bitcoin Trust (GBTC) trading at a discount for the first time in over five years. As one of the biggest Bitcoin buyers, the decreasing demand in the trust could eventually shrink up Bitcoin’s price. In the absence of a Bitcoin Exchange-Traded Fund in the U.S., Grayscale’s Bitcoin Trust (GBTC) allows investors in the U.S. to buy Bitcoin on the stock market.
Grayscale Bitcoin Trust Plunged 20% This Week
Bitcoin’s price is currently stuck between $45,000-$50,000. Along with the falling prices of Bitcoin, Grayscale Bitcoin Trust has also gone down by 20%. This has resulted in the fund losing its premium and is currently trading at a discount compared to Bitcoin. With the premium being gone, its price is actually 0.7% below its holdings.
The $32 billion Grayscale Bitcoin Trust (GBTC) has plunged 20% this week, outpacing a 13% decline in the world’s largest cryptocurrency.
The plunging valuation of Grayscale Bitcoin Trust has even been noted by gold expert Peter Schiff and noted Bitcoin critic:
“If this persists the Trust will have no more inflows and will therefore not be buying any more Bitcoin. Without Grayscale, the biggest daily buyer, where will the new buyers come from to support the price?”
Grayscale Makes Crypto Trading Easier Without Entering the Crypto Market
Investors might prefer stock markets over cryptocurrency exchanges for various reasons. For instance, it makes Bitcoin investments eligible for tax-sheltered accounts, such as pension accounts. Besides, Grayscale’s trusts are regulated with the US Securities and Exchange Commission, while cryptocurrency exchanges themselves aren’t as regulated.
It might also make it easier for people to trade in cryptocurrencies without entering the crypto market itself. As dealing in the crypto space might prove to be a complicated affair for those dealing in it.
Grayscale’s trusts are so popular that the shares in them usually trade at a premium, i.e. each share is worth more than the actual price of Bitcoin.