Grayscale Bitcoin Trust Suffers Record Discount -Breaking
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Grayscale Trust suffers record discountThe world’s biggest fund, Grayscale Bitcoin Trust (GBTC), closed at the record discount lows on January 18.
The discount, or the percentage by which GBTC share price is lower than the price of Trust’s underlying Bitcoin, dropped down by 28.29% according to investment research provider YCharts.
This is the biggest GBTC Discount in many years.
Grayscale Bitcoin Trust went into discount mode February 20, 2021. Although the biggest Bitcoin fund never generated premiums since then, the discount level has rarely fallen below 20%.
Despite the ongoing down-trend of the underlying crypto bitcoin, there several other reasons why Grayscale’s Bitcoin Trust in not bringing profit for its investors.
The first is that the demand for GBTC has declined, in contrast to growing interest and alternative investment options, which offer indirect exposure to Bitcoin.
One of such options is exchange-traded funds (ETFs), which offer cheaper and more flexible services compared to Grayscale’s Bitcoin Trust.
GBTC charges a 2% annual management fee, and ETFs charge 1%. GBTC’s complex structure, which has a limited number of shares and can be redeemed only after six months but cannot be withdrawn whenever an investor requests it, is not the best.
The world’s first bitcoin ETF went live in Canada last year. Even though many wealth management companies, such as Grayscale, have submitted ETF applications to the SEC for bitcoin ETFs (the United States Securities and Exchange Commission) has yet not confirmed them. SEC requested the conversion of GBTC into an exchange-traded funds by the largest bitcoin trust in August 2021.
Grayscale Bitcoin Trust, which was established in 2013, became one of the most sought-after BTC investment vehicles by institutional investors. This allowed them to buy dominant crypto without ever actually owning it.
Grayscale Bitcoin Trust manages assets worth $27 trillion (AUM).
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