Grayscale Bitcoin Trust Premium Drops to New Low of -40%

by James · November 9, 2022

The world’s largest institutional Bitcoin fund, Grayscale Bitcoin Trust (GBTC), is in bad shape. The premium is currently at a record low.

Grayscale Bitcoin Trust closed at a record discount of -41% as the underlying asset continued to drain. The calculation is a premium or discount in relation to the net asset value (NAV) of the GBTC fund.

At -40%, investors can buy shares in the fund at this discount from the price of the underlying asset. At the moment, however, the bears are hustling the markets and everything crypto-related is offloading.

Bloomberg Intelligence analyst James Seyffart also noted the drop:

Of secondary importance here to the broader crypto market, however $GBTC closed with a new record discount — just over 41%. Saw it go as deep as 42% in the last 30 minutes of trading. How deep can it go? pic.twitter.com/aULLW4B64U

— James Seyffart (@JSeyff) 9 November 2022

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Grayscale Bitcoin Fund Trading at Massive Discount

Assets under management (AUM) at Grayscale have also fallen in line with the broader markets. The total stake in Bitcoin Trust has just fallen below $10 billion, according to Coinglass.

Furthermore, the holding per share is equivalent to $14.83, while the market price per share is $8.79, hence a 40% discount.

Grayscale’s second largest fund, the Ethereum Trust, isn’t in any better shape. That’s about $3.4 billion in AUM and holdings per share of $11.44. Additionally, the market price per share is $7.71, which equates to a -32.6% discount for that fund.

Roundhill boss Will Hershey commented:

“Thinking about this more, I think today’s expansion can be partially explained by a lower probability assigned to potential ETF conversion after FTX.”

It is likely that regulators will come down hard on crypto now. This could wipe out any glimmer of hope for the SEC to approve the conversion of the GBTC fund to a spot ETF.

Investors, both retail and institutional, are getting very nervous now and a final capitulation event is beginning.

Bitcoin plunges to new cycle low

Bitcoin prices have crashed to a new low for this bear market cycle, also extending the grayscale discount. BTC fell to $15,700 a few hours ago Thursday morning. It is the lowest the asset has been since November 2020.

Bitcoin has now lost 18.5% in the past week and is down 76.3% from its all-time high this time last year. At press time, the asset was trading at $16,441, according to CoinGecko.

The great crypto purge seems to have bottomed out in the last couple of hours. But the pain may not be over yet.

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