In an unusual situation shares of the Grayscale Bitcoin Trust (GBTC) have been trading at a discount for the tenth consecutive day. It means that the share price of GBTC is falling faster than the underlying cryptocurrency.
— glassnode (@glassnode) March 12, 2021
Historically, GBTC shares have always traded at a premium wrt to the Bitcoin (BTC) price. However, the premium dropped as low as 12% of the market value of Bitcoin (BTC). Speaking on the GBTC premium turning negative, Nic Carter, of crypto-focused venture firm Castle Island Ventures, told Bloomberg:
“It became just too popular and there’s only so much demand at the end of the day by retail investors who are using Schwab or using Fidelity or a traditional brokerage.
Basically, too many funds plowed capital into this trade thinking it was a slam dunk, and then as that capital matured and the units in the trust became market-tradable, the demand that they expected to materialize wasn’t there from the market.”
Grayscale Authorizes GBTC Share Purchase
Earlier on Wednesday, March 10, Grayscale’s parent company Digital Currency Group authorized $250 million worth of purchase of the shares of Grayscale Bitcoin Trust (OTCQX: GBTC). The recently discounted price of GBTC shares and the purchase announcement gave the right opportunity to Bitcoin-critic Peter Schiff to further his criticism.
Schiff stated that Grayscale shall start liquidating its holding to purchase the $250 million worth of shares announced in the buyback.
As a result of a persistent large discount to NAV, the #Grayscale Bitcoin Trust announced that it will be buying back up to $250 million worth of its shares. In addition to reducing AUM, this means Grayscale will be selling #Bitcoin to raise the cash needed to fund the buyback.
— Peter Schiff (@PeterSchiff) March 11, 2021
Currently, GBTC holds 655,360 BTC worth a massive $37.4 billion amounting to 3.5% of the overall circulating supply. However, Grayscale has closed any private for GBTC as of now. The official announcement on the website reads:
“The Grayscale® Bitcoin Trust private placement is offered on a periodic basis throughout the year and is currently closed”.
On the other hand, Grayscale’s latest job postings have raised strong speculations of the fund manager launching its Bitcoin ETF ahead this year.
Grayscale Investments, the firm behind the biggest #Bitcoin trust, has posted at least nine ETF-related positions to LinkedIn, a signal that it's betting on U.S. approval for crypto ETFs https://t.co/nX084ZM6Qs
— Bloomberg Crypto (@crypto) March 12, 2021