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.
The Grayscale $GBTC product has traded higher this week, closing the price gap to spot #Bitcoin by 66%.$GBTC was trading at a -14.44% discount on Friday, and now trades at a much smaller discount of -4.83%.
— glassnode (@glassnode) June 24, 2021
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.