Grayscale BTC Trust Registers Record Discount Of 26.53%

The Grayscale BTC trust registered a record discount of 26.53% and now the investors face more losses as we can see further in our latest Bitcoin news.

The Grayscale BTC trust registers record discounts after being a long-term investment tool of choice for a lot of institutional investors that offer exposure to BTC without the need to buy the actual asset. It comes with a few drawbacks like the annual management fee of 2% and the six-month lockup period.

A hefty discount to the net asset value doesn’t only mean that the GBTC existing holders are running at a loss but could be seen as a bearish indicator of wider institutuional sentiment towards BTC. In other words, the current discount means a weakening interest in the asset with more GBTC supply than demand. Due to how the fund is structured, the shares in the trust cannot be redeemed for the underlying which means that the only way to cash in is to sell the shares but this is only possible after six months. GBTC’s record low came as BTC struggled below the $43,000 mark or down by 9% over the past month and 39% from its November all-time high of $69,044.

$GBTC just closed with a ~26.5% discount….. a new low. Brutal. https://t.co/xhR50Litmn pic.twitter.com/kggc9o15zT

— James Seyffart (@JSeyff) January 18, 2022

The recently launched BTC futures exchange-traded funds like ProShares BTC Strategy ETF also faced a lot of criticism. The asset offers investors more exposure to the leading crypto without a lockup period and lowers fees. Despite the poor performance of the Grayscale Bitcoin instrument, the company has a plan to convert the GBTC into a spot-BTC ETF. However, the US SEC already delayed the company’s Bitcoin ETF application last month. Given the hard-line approach of SEC Chair Gary Gensler, for investmetns products backed by Bitcoin, it is unlikely that Grayscale will be able to execute this conversion.

According to James Seyffart, another option for Grayscale to close the gap between the value of BTC and the market price of GBTC could be to lower the fees and to offer a redemption program. As an extreme measure, he suggested an option of closing the fund for good returning the funds to the investors. This would be bad for BtC however because this scenario is not really possible in the near future as Grayscale will do everything they can to get a BTC ETF approved.