Grayscale’s GBTC Available at Record Low of 43% Discount

Grayscale’s GBTC Available at Record Low of 43% Discount
  • The funds are pooled from several institutional investors and used to purchase Bitcoin.
  • In early 2021, GBTC was trading at a premium of around 29% above the price of Bitcoin.

A little over a week after hitting its previous record low discount to the price of Bitcoin. Grayscale’s Bitcoin Trust (GBTC) struck a new one. YCharts data shows that as of Friday morning, the Bitcoin-tracking investment vehicle was trading at a discount of 42.69%.

Introduced in September 2013, GBTC is a product that provides investors with exposure to Bitcoin without requiring direct ownership of the underlying cryptocurrency. The funds are pooled from several institutional investors. And used to purchase Bitcoin, which is then stored in a Grayscale fund.

Aggravated by Multiple Factors

Historically, Grayscale Bitcoin Trust shares have traded at a premium to their underlying asset. However, this began to change early last year. As other Bitcoin investment vehicles emerged, most notably Canadian Exchange-Traded Funds (ETFs). And several other Bitcoin-based instruments, such as Bitcoin futures ETFs, were introduced later that year.

In early 2021, GBTC was trading at a premium of around 29% above the price of Bitcoin; by mid-February of that year, that premium had dropped to barely 8%. On February 18 and 19, the first exchange-traded funds (ETFs) in Canada began trading.

By February 23, GBTC was trading at a discount to the price of Bitcoin, and its value has continued to decrease since then, hampered by the terrible bear market of 2022 and aggravated by the market damage of the previous two weeks caused by the breakdown of FTX.

Since Grayscale and Genesis are both owned by Barry Silbert’s Digital Currency Group, the latter has been placed on liquidity alert as a result of the continuing problem.

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