The Grayscale Bitcoin Trust's recent plunge has its shares trading at a discount to the cryptocurrency – Markets Insider


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The Grayscale Bitcoin Trust has fallen sharply along with the cryptocurrency itself

  • The Grayscale Bitcoin Trust plunged this week as the price of bitcoin has tumbled.
  • The trust’s share price closed at a 3.77% discount on Thursday, a sharp reversal from recent hefty premiums.
  • The bitcoin price itself has plunged around 20% this week, the biggest weekly drop since March 2020.
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The Grayscale Bitcoin Trust’s shares have plunged almost 20% this week, marking the biggest drop in the world’s largest bitcoin fund in close to a year.

Grayscale’s closing price of $45.64 on Thursday meant the fund’s public shares had fallen more than bitcoin itself over the week.

The trust’s shares closed at a 3.77% discount to net asset value on Thursday, a sharp reversal after trading at hefty premiums as the bitcoin price soared in recent months. It is the first discount since March 2017, according to Bloomberg data.

Investors have sold shares in the Grayscale Trust at a rapid rate over recent days as bitcoin has tumbled from a high of $58,000 on Sunday. The fund has a total of $32.83 billion in assets under management, according to Bloomberg.

The fall into discount territory highlights the extent to which investors have cooled on the fund this week. Its public shares traded at premiums above 15% for much of January as investors used the fund as a key way to gain exposure to bitcoin.

Bitcoin was down around 8.6% to $46,669 as of 9.25 a.m. ET on Friday. It had shed close to 20% over the week, the worst decline since March last year, as investors balk at the sky-high price.

Yet most bitcoin bulls are unconcerned about the recent drop. They argue it represents a good buying opportunity and predict that the price will continue to pull higher.

Katharine Wooller, managing director of UK digital asset exchange Dacxi, told Insider that corporate interest from the likes of Tesla should keep supporting bitcoin.

“Be warned however, bitcoin is known to significantly correct,” she said. “Whilst the medium trend is positive for holders, it is both the sign of a healthy market and a buying opportunity.”

Grayscale chief executive said that it was “certainly a risk” that the GBTC’s premium disappears, at the Bloomberg Crypto Summit on Thursday.

“But ultimately price discovery in GBTC every day is driven entirely by market forces,” he said.

(This article has been corrected. It previously said there had been large outflows from GBTC, when in fact the Trust does not operate a redemption program.)



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