Stay Away from Grayscale Bitcoin Trust Despite Discount Narrowing to 10-Month Low
• The Grayscale Bitcoin Trust (GBTC) has been trading at a discount to its net asset value.
• Investors have been betting the trust is now more likely to be converted into an ETF.
• Should this conversion occur, the discount would narrow to near zero, as funds would then be allowed to flow in and out of the vehicle without affecting the underlying assets.
Grayscale Bitcoin Trust
The Grayscale Bitcoin Trust (GBTC) has persistently traded at a discount to its net asset value. The discount has narrowed to its lowest mark since September off hope the fund is more likely to be converted to an ETF. However, while it remains a trust, there is no way for investors to get Bitcoin out of GBTC due to steep fees (2% annually).
Recent Blackrock ETF Filing
Among the interesting aspects of the fallout from recent spot Bitcoin ETF filings is how it affects GBTC. The trust has been flying, up 56% in the three weeks since Blackrock’s ETF filing was announced; significantly outpacing its underlying asset, Bitcoin which was up only 21%. This means that GBTC’s discount to net asset value has also narrowed to its smallest mark since September, now below 30%.
Regulatory Climate in US
The entire GBTC debacle represents the mess that is the institutional regulatory climate in the US. Spot ETFs are a question of when rather than if and such investment vehicles will then be a thing of the past. This won’t assuage frustration of GBTC investors who have been caught badly as alternative Bitcoin investment vehicles have come online and demand for the trust has dried up.
Alternative Investment Vehicles
Alternative investment vehicles such as spot bitcoin ETFs offer better pricing than GBTC trusts due to their ability for people being able to move money in and out freely without affecting underlying assets prices or having large fees associated with it. These have so far only been available on overseas exchanges but this could change soon should they receive SEC approval in America.
In conclusion, while investors hope for increased access and liquidity with spot bitcoin EFTs being approved by US regulators, current holders of Grayscale’s product should continue expecting discounts until such time as these become available or other alternatives become available stateside..