- Grayscale has been at the top of many Bitcoin-related developments in the past few months. Finally, it was announced that the GBTC premium turned negative for the first time after its launch in 2013. This premium represents an “overpayment”, mostly on behalf of institutional buyers who want to interact with Bitcoin while complying with regulations.
Why does the Grayscale Bitcoin Trust premium matter?
Historically, the GBTC premium has been quite high. It measured about 40% last month. However, data from Skew on Feb.2 confirmed that this statistic fell to -1.5% before recovering slightly.
The decrease in premiums may be due to increased sales by accredited investors or a lack of demand for GBTC from non-accredited investors at this price. This lack of demand for GBTC may also be due to increased competition in the market and divert demand elsewhere.
This was highlighted in a recently published article:
“Corporate purchasing is an investment in GBTC, and institutions buy GBTC in return for a premium. Demand is expected to drop when premium falls, and that’s what happens. What does this entail? The decline in demand indicates that there may be a pause or worse a halt in corporate GBTC buying, and this also highlights the possibility of a retraction of Bitcoin demand.
Trust products increase in interest
Although the SEC has not yet approved a Bitcoin ETF in the United States, a number of companies have recently submitted applications pointing to their intention to offer a Bitcoin investment Trust tool. The most recent of these was BlockFi, which filed it on January 29th.
Investing in GBTC has long been a popular business for many institutions. Three Arrows Capital recently announced a position of over $ 1.2 billion in Grayscale’s Bitcoin Trust.
However, given the current scenario, the downside of discounted GBTC trading can be quite significant.