Spot Bitcoin ETFs have been approved, and trading volumes remain strong, but Grayscale Bitcoin Trust (GBTC) faces challenges. GBTC began trading at a significant discount in early 2021, at times nearing 50%, and has continued to find buyers despite the negative premium. Even as this discount has narrowed, new issues have emerged.
The negative premium recently dropped to single digits as the belief in ETF approvals grew, making the quick gains attractive. GBTC provided institutional investors with easy access to Bitcoin, but the approval of spot Bitcoin ETFs and the emergence of lower-fee funds, combined with the elimination of the negative premium, have increased the selling appetite. Grayscale did not reduce its fees to competitive levels, possibly expecting sales to dominate.
Since Bitcoin ETFs started trading, GBTC’s Bitcoin reserves have been steadily decreasing. On January 11, the company held 599,000 BTC, which has since decreased by 12,000 BTC.
A total of 31,638 BTC has been transferred from Grayscale reserves to Coinbase addresses, including recent transactions. This suggests that more BTC could be sold OTC, increasing the supply for sale and potentially pressuring the market.
GBTC charges a high fee of 1.5%, while competitors like BlackRock’s iShares Bitcoin Trust request fees as low as 0.25%, with some offering zero-fee policies for certain periods. With fee disparities, GBTC sales are likely to continue, potentially exerting downward pressure on the market in the coming days.
