The Grayscale Bitcoin Trust (GBTC), which is an investment option for Bitcoin (BTC), is currently trading at almost 50% below the price of BTC in regular markets.
According to data from Coinglass, on Dec. 8, GBTC shares hit a new low of -47.2% when compared to BTC/USD.
GBTC Struggles Post-FTX Incident
Following the recent concerns in the Bitcoin industry after FTX’s downfall, GBTC is now trading at nearly half the price of Bitcoin.
GBTC, which is the largest institutional Bitcoin investment vehicle with assets worth approximately $10 billion, has been facing various challenges recently.
While GBTC shares used to trade at a higher value than BTC/USD, creating what was known as the “GBTC premium,” this premium turned negative in 2021. Despite this discount, institutional interest has not increased significantly.
Amidst efforts by Grayscale, the operator of GBTC, to convert it into an exchange-traded fund (ETF) and the legal battles with US regulators, doubts have grown regarding Grayscale and GBTC. Concerns were also raised when Grayscale did not provide proof of its BTC reserves even though Coinbase, the custodian, confirmed the security of its assets.
This week, Grayscale faced a lawsuit from investor Fir Tree due to what was termed as “shareholder-unfriendly actions.” Concurrently, data suggests a decline in overall interest in crypto ETFs this year.
Woo: Challenges can be “partly positive” for Bitcoin
The GBTC premium, which had just started to recover from previous record lows, dropped even further in comparison to Bitcoin’s net asset value (NAV).
Timothy Peterson, an investment manager at Cane Island Alternative Advisors, noted, “$GBTC discount to bitcoin NAV is on the express elevator to hell. => sentiment = bearish.”
Willy Woo, the creator of Woobull, opined that the diminishing exposure to GBTC may not be entirely detrimental to Bitcoin prices. He argued that part of the impact had actually been favorable for BTC price, as selling GBTC did not directly affect BTC price, but buying spot BTC did.
Despite the concerns surrounding GBTC, some experts, like Alistair Milne, believe that turning GBTC into an ETF would have helped to avoid many issues this year, implying that the slow pace of change in the US has exacerbated the situation.
It’s important to note that the opinions expressed here are solely those of the author and may not necessarily represent the views of Cointelegraph.
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