Bitcoin

Grayscale Tempts High Rollers with Zero-Premium GBTC

Christine Vasileva | Oct 10, 2019 | 09:00

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Grayscale Capital, the producer of exchange-traded shares based on leading digital coins, is rethinking its strategy on inviting institutional investors. Now, GBTC shares are on a special offer, with their Bitcoin (BTC) component at Native Asset Value (NAV).

GBTC Premium Disappeared

Shares of the Grayscale Bitcoin Trust (GBTC) are usually sold based on current demand. This also means some investors have been willing to pay a premium compared to spot BTC prices. But now, Grayscale aims to boost demand by offering cheaper exposure to BTC.

$GBTC reopened today its private placement window, allowing accredited investors to buy shares at face value (rather than paying a premium on secondary markets). GBTC holds approx 238K bitcoin. Last time window opened (July), it saw 14K in inflows, about 8 days of miner issuance. pic.twitter.com/VKV3pOFY9X

— Alex Krüger (@krugermacro) October 10, 2019

The move comes just as the GBTC premium over the NAV shrank to almost zero. In the past, the premium has risen to as much as 47%, and was about 22% during peak BTC prices. A high premium is seen as signalling robust institutional interest.

Inversely, a lowered premium is seen as a loss of demand and a negative attitude to BTC. Grayscale still sees its shares at a rather depressed price, with total assets under management still at $2.1 billion.

10/09/19 UPDATE: Holdings per share, net assets under management and digital assets per share for our investment products.

Total AUM: $2.1 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $XRP $ZEC pic.twitter.com/Ni01KFqkU7

— Grayscale (@GrayscaleInvest) October 9, 2019

Grayscale Decides Against Adding New Assets

The price of GBTC recovered to $10.38, up more than 7% in the past day. The BTC included in each share, an amount of 0.001 BTC, is accounted at $8.19 based on the latest estimate. This is still slightly lower in comparison to the current BTC price of $8,538.58.

The appeal of GBTC shares stems from their accessibility on OTC markets, and the fact that they can be held in regular brokerage accounts. The shares offer exposure to BTC, without the requirements for self-storage. GBTC are also eligible as standard investments.

Other assets still see a lack of premium. The Ethereum-based trust has a discount, exposing to ETH at around $181, while the real asset has grown above $188. Other assets such as ZCash (ZEC) also sell at a discount through Grayscale.

The GBTC offer and the shrinking premium are not the only indicators for the BTC sentiment. Currently, the fear and greed index is improving, rising from 27 points to 41 points within a day. BTC is still attractive in crypto-to-crypto trades, and follows a different logic on international markets.

Grayscale itself has decided to keep its current selection of assets, not deciding on new coins to add.

3/ Although no new assets qualified for inclusion following DLC Fund's Quarterly Review (9/30/19), the below table highlights how DLC Fund’s weightings have changed from June 30, 2019 to September 30, 2019: $BTC $ETH $XRP $BCH $LTC pic.twitter.com/cx5acntwQd

— Grayscale (@GrayscaleInvest) October 7, 2019

The profile of the GBTC funds has also shifted, with BTC now having a weight of above 90%, mirroring the preference for BTC over alcoins on the wider market.

What do you think about GBTC premiums shrinking? Share your thoughts in the comments section below!

Images via Shutterstock, Twitter @GrayscaleInvest @krugermacro