The discount in the shares of Grayscale Investment's bitcoin trust continues to widen even as bitcoin's recent resilience raises hopes of a bull market revival. Reports godbole17
The discount in GBTC shares relative to the underlying cryptocurrency held in the fund widened to a record 36.2% on Sept. 30, according to data tracked by Delphi Digital. GBTC shares slipped into the discount category in February last year and have traded lower than the fund's net asset value ever since.
So, it's natural to assume that the continued widening of the GBTC discount stems predominantly from the absence of institutional demand. However, that's not necessarily true and persistent discount at least partly reflects the increasing availability of alternatives like exchange-traded funds . The Grayscale bitcoin trust is a close-ended fund, meaning BTC deposits remain locked forever. As of writing, the trust holds BTC 635,240, worth over $12 billion. That's roughly 3.3% of bitcoin's circulating supply.
Besides, the launch of relatively cheaper ETFs in Canada, Europe and the U.S. later that year took away a significant chunk of demand from GBTC. While Grayscale doesn't allow redemptions and an ETF allows the market maker to create and redeem shares at will. So, traditional market funds and institutions prefer ETFs over close-ended funds like the Grayscale Bitcoin Trust.
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