The current Bitcoin price volatility and sideways movement are being attributed to the ongoing unlock of Grayscale’s flagship Bitcoin trust $GBTC. Many believe the unlock of shares after 6-month put pressure on the spot market in the short term. However, it is important to note that Grayscale doesn’t sell its BTC on the expiry of shares.
Investors buy Bitcoin to deposit it in the GBTC fund and get shares against their BTC deposit, In a way, the Bitcoin kept in GBTC never moves apart from the 2% management fees charged by the Grayscale.
The unlock of these shares is still bearish in the short term since the premium on GBTC tends to go negative around the selling period, thus investors have more incentive in buying GBTC shares than Bitcoin at its spot price.
The GBTC premium is currently at -11.25% which means after selling their shares on the spot market the traders can again buy these shares at an 11% discount than BTC at spot price.
GBTC premium plays a key role in the 6-month long holding period, the institutional buyers hope to sell it at a high premium than the price bought it at. GBTC has traded a majority of the first quarter in a positive premium price range but turned negative post-April. In absence of a regulated Bitcoin Exchange Traded fund, Grayscale’s crypto products have become a go-to choice for investors. The world’s leading asset manager is also planning to convert its GBTC into a Bitcoin ETF by next year.
Bitcoin Price Lose Key On-Chain Support
The top cryptocurrency has lost more than 50% of its valuation since its ATH near $65,000 in April. BTC has failed to break past $35K key resistance on several occasions and currently struggling to hold $31.5K support.
The top cryptocurrency’s struggle to break out of its current price range has driven out retail players leading to a low liquidity market. The bearish phase may continue further if Bitcoin fails to hold onto the $30K support.