Grayscale Bitcoin Trust (GBTC) Trades At 34% Discount, Should You Buy?

Bitcoin prices have plummeted this year, pulling down the valuations of several equity instruments that track the token.

But the Grayscale Bitcoin Trust (GBTC)- an equity instrument that tracks Bitcoin- has fared even worse than the token it is based on.

While Bitcoin is down about 55% so far this year, data from Google shows that GBTC has plummeted over 63% this year.

GBTC is also trading at a record-high discount of 34% to Bitcoin prices. While the discount may present a potential opportunity for bargain hunting traders, it also represents the current turmoil in the crypto market.

The trust, through its massive Bitcoin holdings, is the only equity instrument in the United States that gives its holders direct exposure to the world’s largest cryptocurrency.

Greyscale Bitcoin Trust trades at a discount of 34%

GBTC is now trading at a record discount of 34.09%, according to coin glass data. This implies that the price of GBTC’s shares, which is at a 19-month low of $12.47, is trading 34% lower than the value of the Bitcoin held by Grayscale.

Based on this, if GBTC were to trade at the value of its Bitcoin holdings, the share price would jump 41% from current levels, to $18.92.

Grayscale currently holds 638,900 Bitcoin- worth about $13.11 billion. It is one of the largest holders in the world.

But the sharp discount GBTC currently trades at also represents just how averse traders are to crypto. Equity holders of GBTC are dumping shares faster than Bitcoin is being sold on the market, making the trust an extremely risky buy.

Grayscale’s other crypto trusts also trade at steep discounts

The digital asset manager’s Ethereum trust (EETH) is currently trading at a discount of nearly 34%. The Ethereum Classic trust (ETC) has a negative premium rate of 52.13%.

The New York-based asset manager is the largest digital asset manager in the world, with total assets under management of around $43.6 billion at the beginning of the year.

The firm has been attempting repeatedly to convert GBTC into a spot-Bitcoin ETF, and has even threatened legal action against the Securities and Exchange Commission over the matter.