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Bleak outlook for Grayscale Bitcoin Trust: these are the reasons


 

Bitcoin is selling for $ 56,500 at the time of this writing. That's well below the all-time high of $ 69,000. Grayscale Trust is the largest Bitcoin fund in the world, with assets of $ 37 billion. In second place comes ProShares Bitcoin Strategy (BITO) ETF with a volume of 1.3 billion US dollars. This fund has only been around since October of this year.

Grayscale was popular with investors because it is the only fund that directly owns Bitcoin. All others offer exposure through futures contracts. A Grayscale spokesperson commented:

An ETF is the most efficient way to compensate for a discrepancy between the share price of our products and the basic value. Investors want to invest in Bitcoin in the form of a spot ETF. And we at Grayscale believe they deserve it.

Many whales own BTC through the Grayscale Trust. With an investment of $ 375 million, Cathie Woods Ark Invest is the largest of these. However, according to a report, institutional investors would have been better off owning Bitcoin directly.

Problems at Grayscale Capital

Bitcoin's price has grown 95% so far this year. By comparison, Grayscale's stocks are only up 42% over the same period. Last year, Bitcoin gained 340%, while Grayscale gained 220%. The distance increases further.

The biggest problem with Grayscale Bitcoin Trust, however, is its structure: a closed-end fund with a fixed number of market shares. Depending on market demand, the shares can be traded at a discount or a premium. At the moment they are trading at a discount of 14%. That may seem good, but investors buying in the open market have paid too much for Bitcoin because the fund traded at high premium.

Investors with net worth over $ 1 million or annual income in excess of $ 200,000 can purchase Shares directly from Grayscale. The purchase of Bitcoin for the price of Sutbstanzwertes could be very lucrative, has been touted as the Trust at a premium. Because in this case, investors would have access to assets at a discount to the market price.

Transition to the exchange-traded fund

In October, Grayscale filed with the SEC to convert the trust into an ETF. But the SEC has yet to warm up to cash trading in Bitcoin ETFs. DCG, the parent company of Grayscale, recently announced that it would buy back up to $ 1 billion in the trust. It has already bought back $ 388 million in market share. However, that did not affect the discount.

That's another reason the tee stays as it is. Several Bitcoin futures ETFs have started their business in the United States. There are a few spot-based ETFs in Canada.

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