Sub-zero interest? GBTC hits biggest discount since May Bitcoin price crash

GBTC will “take time” to restore its balance thanks to changing market forces, analyst Willy Woo says.

Bitcoin (BTC) investment vehicle the Grayscale Bitcoin Trust (GBTC) is trading at its biggest discount since the May BTC price crash.

Data on Thursday confirms that as BTC/USD trades near $44,000, GBTC shares are over 16.5% below the spot price.

Analyst: Grayscale comeback “will take time”

Grayscale, which has $42 billion in assets under management across its various cryptocurrency funds, has seen institutional interest endure throughout the recent Bitcoin price dip.

Despite some conspicuous buy-ins, however, progress has been slow throughout the period of volatile activity, which saw Bitcoin dip from $64,500 to just $29,000.

While the spot price has recovered, GBTC interest has lagged, producing a major discount to net asset value (NAV), which has increased, not decreased, with Bitcoin’s recent gains.

This week, the discount even passed its lowest point from July, meaning that it is now at its deepest since the start of May’s price rout.

GBTC premium chart. Source: Bybt

In comments on the fund’s performance, statistician Willy Woo highlighted its management fee in addition to previous trading conditions.

“GBTC reversed due to 2% fee on 600k+ BTC. But it was oversupplied by the frothy arb trade before the dip,” he responded to popular commentator BTC Archive during a Twitter debate.

“It will take time for it to find its proper balance again, given they cannot reduce inventory. Corporates bought the dip too, see Microstrategy.”

Meanwhile, GBTC unlocking events, long feared to be a negative market influence, are set to come to an end this month, with the vast majority already complete without any noticeable market impact.

Echoes of Q4 2020

That arbitrage trade was a heavy market driver in late 2020 and early 2021, the period in which the most recent Bitcoin bull run really got started, on-chain analytics firm Glassnode noted last week.

Related: 3 ways this Bitcoin bull run is different than late 2020

This was in relation to outflows from exchanges, which are now at similar levels to that same period, pointing to “heavy accumulation” among hodlers in anticipation of further BTC price rises.

Bitcoin exchange net position change annotated chart. Source: Glassnode/Twitter