Bitcoin Keeps Falling Along With Bitcoin Grayscale Trust Shares

What happened

Shares of Grayscale Bitcoin Trust (OTC: GBTC), a fund that allows investors to indirectly own bitcoin, fell hard on Thursday as the price of bitcoin continued to slide. As of 2:15 pm EST, Bitcoin Grayscale Trust shares were down 10%. And bitcoin was down 9% over the last 24 hours, according to CoinDesk.

So what

Since Grayscale Bitcoin Trust has only bitcoin, it is logical that the two would go up and down together. In a perfect world, Grayscale Bitcoin Trust would trade perfectly in line with the value of its bitcoin tokens. But this is not the case. As bitcoin rises, it creates demand for this alternative asset. But not all investors are ready to open an account with a cryptocurrency exchange. Some would prefer to own it indirectly, and Grayscale Bitcoin Trust is one of the only options for that.

Piles of physical, golden coins display the bitcoin symbol.

Image source: Getty Images.

What now

At times, this position creates high demand for Bitcoin Grayscale Trust shares, and they trade for a premium to their underlying bitcoin assets. However, it is currently getting much closer to its net asset value (NAV). The fund’s website updates daily at 4pm, so these numbers are from yesterday. But NAV of Grayscale Bitcoin Trust was $ 33.26 per share at its latest update.

The price of bitcoin was around $ 35,000 at 4 pm EST yesterday. It is currently around $ 32,300. So the NAV for Grayscale Bitcoin Trust has declined slightly more than 10% to about $ 30 a share. For comparison, shares are trading at around $ 32 per share. This is about the closest it has been in a while.

If you’ve been considering Grayscale Trust Bitcoin investment, it certainly becomes more attractive. However, if you invest, you assume the price of bitcoin will be higher in the long run. Predicting the future movement of cryptocurrencies is a difficult thing to do.