GBTC ‘elevator to hell’ sees Bitcoin spot price approaching 100% premium
Bitcoin (BTC) investment vehicle Grayscale Bitcoin Trust (GBTC) is trading close to 50% below the BTC price on spot markets.
Data from the on-chain analytics platform Coinglass confirms that on December 8, GBTC shares hit a new record low of -47.2% against BTC/USD.
GBTC problems pile up after FTX
In the latest battle of nerves to hit the Bitcoin industry since the FTX crash, GBTC is nearing half price versus the price of Bitcoin.
GBTC is the largest institutional investment vehicle for Bitcoin, with assets worth around $10 billion, and has faced many challenges in recent years.
The price of the shares previously traded higher than BTC/USD, resulting in what was called the “GBTC premium.” Since 2021, however, that premium has turned negative, but the resulting “discount” has attracted little further institutional interest.
As Cointelegraph reported, beyond a few key exceptions like ARK Invest, GBTC is weakening. Operator Grayscale, part of Digital Currency Group (DCG), has meanwhile sought to convert it into an exchange-traded fund (ETF), suing US regulators who stand in the way.
In the midst of the legal battle, FTX has triggered liquidity problems elsewhere in the DCG empire, casting doubt on Grayscale and GBTC. Grays refusing to show proof of their BTC reserves last month added to the tension, even though custodian Coinbase confirmed the assets were safe.
“Greys are in some real trouble if they have to reveal where all the Bitcoins are like behind GBTC,” Bitfinex’ed popularly commented wrote in part of a Twitter discussion on the topic this week.
This week, things got even worse, as Grayscale faced a lawsuit from investor Fir Tree over what it calls “shareholder-unfriendly practices.”
Meanwhile, overall interest in crypto ETFs has fallen this year, separate data suggests.
Woo: Issues ‘partially bullish’ for Bitcoin
With that, the GBTC share price ratio to its underlying Bitcoin holdings, after barely recovering from previous record lows, fell even further.
Related: Why Is Bitcoin Price Down Today?
“$GBTC discount to bitcoin NAV [net asset value] is on the express elevator to hell. => sentiment = bearish,” in summary Timothy Peterson, chief investment officer at Cane Island Alternative Advisors.
Others lamented the slow pace of change in the United States that is fueling the fire.
“Quite a lot of the pain this year would have been avoided if GBTC had been made an ETF SEC that kept everyone safe!” investor and entrepreneur Alistair Milne reactedwhich reflects popular sentiments of recent weeks.
Meanwhile, Willy Woo, the creator of statistics resource Woobull, argued that the impact of fading GBTC exposure was not necessarily directly negative for BTC price strength.
“The GBTC/DCG/Genesis fears are a bearish cloud hanging over the market. But counterintuitively, part of the effect has been bullish for the BTC price,” he tweeted on December 5.
“37.5% of people who sold GBTC bought spot BTC to take custody. Selling GBTC does not affect BTC price, place of purchase does.”
An additional Twitter survey asked the platform’s users who theoretically own GBTC about their motives for selling:
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
