After the recent drop in Bitcoin prices, the latest Skew data now suggests that Grayscale’s GBTC premium rate is below 10%. The lower rate comes just weeks after the premium hit 41% in late December. The GBTC premium is a measure of the extent of the difference in value between the crypto-asset in the open market and the grayscale fund.
The same data also shows that between the end of October 2020 and January 21 of the current year, this premium averaged 22%. However, in the seven days leading up to January 21, that rate fell to 7.3%. According to Bohdan Prylepa, CTO at Prof-it.bz, this “decline indicates the sale of shares by some investors after the vesting period ends”. This is in contrast to a rising premium, which, according to the CTO, is an indication of “high demand for GBTC”.
Declining demand for GBTC
Justin Barlow of Thetie.io also agrees with Prylepa’s view. He adds that “GBTC has traded at a premium on the underlying bitcoin for but one day since launch.” He suggests that individual “aware of the premium may have confidence that it will continue and knowingly hold GBTC stock.
However, Barlow speculates on the reasons for the premium dropping over 40% from current levels. According to him, one of the reasons could be:
“Institutional and accredited investors who have basically placed an arbitrage trade on the premium (short the underlying Bitcoin and buy GBTC) must close their positions (buy back Bitcoin and sell GBTC), which is putting downward pressure on caused the premium. “
Barlow also suggests other factors, such as the slowdown in retail demand following the recent Bitcoin decline, as well as competition from competing products like 3iq or Osprey’s Bitcoin Trust.
Additions to the grayscale portfolio
Despite the reduced premium on GBTC and the most recent BTC Grayscale continued to report new milestones. On January 21, a few days after recording the largest single-day asset movement, the company announced that it now manages $ 25.5 billion in assets.
Additionally, it has been reported that the company may have filed new trusts with the Trust of Delaware in late 2020 information On the state’s website, Grayscale has registered six other trusts, including Chainlink, Tezos, Liverpeer, Decentraland, Filecoin and Basic Attention Token.
Still, reports of the new filings have raised the concern of some, China-based English-speaking crypto journalist Wu explains. According to Wu, “the Chinese community is questioning the latest cryptocurrency trusts filed by DCGs Grayscale, including shitcoin BAT MANA and LPT.” In his tweet, Wu also suggests that some of the tokens mentioned could be “securities”. He ends the tweet by asking; “Is this illegally manipulating its price?”
As a report quoted by Grayscale CEO Michael Sonnenshein explains, filing a trust does not necessarily mean that the company will “bring a product to market.”
Do you think the premium on the GBTC will rise above 10% again? Please share your views in the comments below.
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