Looking for cheap Bitcoins? Grayscale Bitcoin Trust (GBTC) shares are trading at a 47% discount. This is the second largest discount ever, only valid in December 2022.
How does this discount work, what does it entail and why are grayscale bitcoins so cheap?
Bitcoin is 47% cheaper on Grayscale
The fund is officially called Grayscale Bitcoin Trust (GBTC) and investors can invest in it by buying shares in it. You do not buy Bitcoin directly from Grayscale, you buy shares in a fund that contains Bitcoins. The value of these shares is now 47.35% below the real bitcoin price.
This discount is the difference between the current Btcoin price and the share price of the fund. If you have to pay more, it is called premium.
The graph below shows the evolution of the GBTC bonus or discount. Until March 2021, GBTC could only be bought with a premium, but since then the discount only seems to increase. In December 2022 there was a discount of up to 49%.
How does the Bitcoin discount work?
Grayscale Bitcoin Trust currently offers exposure per share of 0.00091067 BTC. The value of this small amount of Bitcoin on the BLOX is 18.41 euros.
However, through GBTC shares, the same amount of bitcoin is traded at a price of 8.72 euros, a discount of 47.35% to be exact. In other words, if you want to invest in Bitcoin through the Grayscale fund, you will pay almost half as much as buying Bitcoin outright.
You could almost say we’re all crazy not to stockpile massively, were it not for the fact that GBTC is mainly aimed at institutional investors who don’t want to invest directly in Bitcoin. So you do not manage Bitcoin yourself in your wallet or your BLOX vault, you can only see the stock value.
Parent company sells shares of Bitcoin Grayscale fund
The collapse of the FTX played a big part in December’s sharp discount. Confidence in the cryptocurrency market has plummeted as a result, but grayscale can survive this, as long as it can survive some of its problems.
One of those problems lies with Grayscale’s parent company. That company is the Digital Currency Group (DCG) and is struggling due to the bankruptcy of Genesis, another subsidiary.
DCG was forced to sell part of its stake in Grayscale’s bitcoin fund. With that money they tried to steer the bankruptcy of Genesis in the right direction.
The parent company owned approximately 67 million GBTC fund shares, worth €729 million. Theoretically, the sale of these stocks should not directly affect Bitcoin’s normal price.
Grayscale also has problems
But not all problems can be thrown over the wall. For example, Osprey Funds recently filed a lawsuit against Grayscale alleging “false and misleading advertising” regarding the crypto fund. Osprey Funds can be considered a competitor and also offers crypto investment products.
Fir Tree Capital Management has asked the Delaware Chancery Court to investigate whether Grayscale properly handles customer money.
If the market could talk, the GBTC discount would tell a story. Investors have been raising concerns about the Grayscale Bitcoin Trust since December.
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Source: Btc Direct
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Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
