Following the recent drop in bitcoin price, the latest Skew data now indicates that the premium rate on Grayscale’s GBTC is below 10%. The lower rate comes just weeks after the premium peaked at 41% at the end of December. The GBTC premium is a measure of the magnitude of the differences in value between the crypto asset in the open market and in the grayscale fund.
The same data also shows that between the end of October 2020 and January 21 of the current year, this premium was on average 22%. However, in the seven days leading up to January 21, this percentage dropped to 7.3%. According to Bohdan Prylepa, the CTO at Prof-it.bz, this “decline indicates the sale of shares by some investors after the lock-up period”. This is in contrast to a rising premium, which, according to the CTO, is an indication of “high demand for GBTC.”
Demand for GBTC
Justin Barlow of Thetie.io also agrees with Prylepa’s view, adding that “GBTC has been trading at a premium to the underlying bitcoin in one day since launch.” He suggests that individual “investors who are aware of the premium can be confident that it will go ahead and knowingly hold GBTC shares.
However, Barlow speculates the reasons behind the premium drop from more than 40% to its current level. One of the reasons could be:
“Institutional and accredited investors who have in effect placed an arbitrage trade on the premium (going short on the underlying bitcoin and buying GBTC), who have to close their positions (buy back bitcoin and sell GBTC), causing downward pressure on the premium.”
Barlow also suggests that other factors such as “retail demand is leveling off after the recent bitcoin dip” and competition from competing products such as 3iq or Osprey’s Bitcoin Trust may be behind the decline.
Additions to the grayscale portfolio
Nevertheless, despite the reduced premium on GBTC and the recent BTC dive, Grayscale continues to report new milestones. On January 21, a few days after recording the largest one-day assets fetchthe company reported that it now has $ 25.5 billion in assets under management.
In addition, reports have also surfaced that the company would have filed for new trusts from the state of Delaware by the end of 2020. information On the state website, Grayscale has filed for six more trusts, including Chainlink, Tezos, Liverpeer, Decentraland, Filecoin, and Basic Attention Token.
Still, reports of the new filings have raised concerns among some, as China-based English-language crypto journalist Wu explains. According to Wu, “the Chinese community is questioning the latest cryptocurrency trusts filed by DCG’s Grayscale, including shitcoin BAT MANA and LPT.” In his tweet, Wu also suggests that some of the mentioned tokens could be ‘securities’. He ends the tweet by asking; “Is this the illegal manipulation of his price?”
However, as a report quoting Grayscale CEO Michael Sonnenshein explains, merely filing a trust does not necessarily mean the company will “market a product.”
Do you think that the premium on the GBTC will again be above 10%? Share your thoughts in the comments below.
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