The GBTC Discount Narrows Down By 66% In A Week Following Ark Investments’ Purchase

By Bhushan Akolkar
June 24, 2021 Updated June 24, 2021
Best In




On Tuesday, the Bitcoin (BTC) price tanked under $30,000 levels wiping out all its 2021 gains. This gave many investors the opportunity to buy the dips and increase their holdings. As Glassnode reported, the GBTC Discount has narrowed down by 66% over the last week.

Last Friday, June 18, the GBTC product was trading at a discount of -14.43% and now it has narrowed down to -4.83%. Meaning, the GBTC product has closed the gap with spot Bitcoin price by a massive 66% in a week’s time.

This happens as institutional players started buying the dips after Tuesday’s price crash. On Tuesday, June 22, Cathie Wood’s Ark Invest purchased over 1 million additional GBTC shares worth a massive $29.3 million. Post the purchase, the Ark Generation Internet ETF (ARKW) ETF now holds 8.5 million GBTX shares in total.

The Movement in GBTC Share Price

The Grayscale Bitcoin Trust (GBTC) is one of the biggest crypto investment vehicles in the U.S. allowing institutional players to gain exposure to Bitcoin. The GBTC premium or discount usually refers to the difference between the price of the underlying BTC asset and its implied price based on the trust’s shares.

Last month, there were talks that Grayscale is planning to convert its GBTC product into an exchange-traded fund (ETF) subject to regulatory approval. Some traders believe that the discount will evaporate if Grayscale gets permission from the U.S. SEC.

Interestingly, the GBTC share purchase for institutional players comes with a six-month lockup. By the end of June i.e. next week, the lockups will expire. Post the unlock, investors who purchased GBTC shares at a premium in Dec-Jan won’t be willing to sell them at a discount.

As a result, this won’t create further downward pressure on GBTC shares. Thus, we won’t be possibly seeing more sellers next week, which will further narrow the discount gap.

All eyes will be on whether if GBTC manages to secure the U.S. SEC approval for the ETF.

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

Next Story