Following the recent downside to bitcoin prices, the latest Skew data now indicates that the premium rate on GBTC Grayscale is under 10%. The lower rate comes just weeks after the premium peaked at 41% towards the end of December. The GBTC premium is a measure of the extent of differences in value between the crypto asset on the open market and the Grayscale fund.
The same data also shows that between the end of October 2020 and January 21 of the current year, this premium is on average 22%. However, in the seven days leading up to January 21, this rate dropped to 7.3%. According to Bohdan Prylepa, the CTO at Prof-it.bz, “this fall indicates the sale of shares by some investors after the end of the freeze period.” This is in contrast to a rising premium, which, according to the CTO, signals “high demand for GBTC.”
Reduce Demand for GBTC
Also agreeing with Prylepa’s opinion is Justin Barlow of Thetie.io, who goes on to add that “GBTC has traded for a premium to the underlying bitcoin in every day but a day since its launch.” It suggests that individual investors who are aware of the premium may be confident that it will continue and deliberately hold GBTC shares.
However, Barlow speculates on the reasons behind the premium reduction of over 40% to current levels. According to him one of the reasons could be:
“Institutional and accredited investors essentially put arbitrage trading at the premium (short of the basic bitcoin and buy a GBTC) and had to close their positions (buy back bitcoin and sell GBTC) causing downward pressure on the premium.”
Barlow also suggests that other factors such as “retail demand leveling up after the recent bitcoin dip” as well as competition from competing products like 3iq or the Ospreys Bitcoin Trust may be behind the fall.
Additions to the Grayscale Portfolio
Nevertheless, despite the reduced premium on GBTC and the recent BTC dive, Grayscale has continued to report new milestones. On January 21, just days after recording the largest one-day asset transfer, the company reported that it now has $ 25.5 billion worth of assets under management.
Furthermore, reports have also emerged that the company could have filed for new trusts with the State of Delaware in late 2020. According to information on the State’s website, Grayscale has filed for six other trusts including Chainlink, Tezos, Liverpeer, Decentraland, Filecoin, and Basic Comment Ticket.
Still, reports of the new filing have raised concerns some as the Chinese crypto-journalist from China explains in Wu. According to Wu, “the Chinese community is questioning the latest cryptocurrency trusts filed by Grayscale DCG, including shitcoin BAT MANA and LPT.” In his tweet, Wu also suggests that some of the tickets mentioned may be “guarantees.” He ends the tweet by asking; “Does this treat its price illegally?”
And yet, as one report quoting Grayscale CEO Michael Sonnenshein explains, filing a trust alone does not necessarily mean that the company will “bring a product to market.”
Do you think the premium on the GBTC will go above 10% again? Share your thoughts in the comments section below.
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