Bitcoin exposure can be much cheaper when using this fund, but there are a few downsides
The Grayscale Bitcoin Fund was one of the main ways of gaining exposure to the cryptocurrency market for the majority of institutional investors during the bullrun era of 2017. However, with the advent of Bitcoin futures ETPs, the Investors’ attention shifted and the fund’s discount began to reach unprecedented levels. values.
36% cheaper than on site
According to data shared by Arcane Analytics, it is much cheaper to get exposed to BTC via Grayscale compared to spot. The discount to the net asset value of the GBTC fund reached an all-time high of 36%, making it much more profitable to buy Bitcoin through the fund rather than using the cash asset.
The current discount on GBTC and the lack of inflow into it paints a clear picture: institutional investors don’t feel this is the right time to invest in Bitcoin and the cryptocurrency market in general. .
The GBTC rebate hit a new all-time high of 36% last week, an implied bitcoin price of $12,500.
The current discount implies that GBTC will remain closed until January 2045. pic.twitter.com/gW4DEouZAp
— Arcane Research (@ArcaneResearch) October 5, 2022
A high discount to NAV could prove to be a good opportunity for investors when Bitcoin re-enters the uptrend, as the discount tends to become premium when demand for such exposure is on the rise.
Unfortunately, some investors prefer to avoid GBTC, given certain drawbacks like the minimum investment value of $50,000, which does not apply to secondary markets, a lock-in period and notable management fees.
Generally, institutional flows to the cryptocurrency market are going through tough times, given the almost non-existent volume on Bitcoin and Ethereum ETPs and funds in the United States and Canada.
The crisis on the institutional side of the market will most likely continue until the United States implements a tight monetary policy to fight inflation.