Is Bitcoin Price Really Influenced by the Grayscale GBTC Premium?

Grayscale’s Bitcoin Trust empowers investors to rejoice exposure to the price crusade of bitcoin via a classic investment tool, without the hassle of purchasing, storage, and protecting bitcoins. Grayscale Bitcoin Trust does not presently work on a redemption drive and may stop creations for some time and commence again. 

The Current Scenario

Grayscale’s Bitcoin Trust shares (GBTC) are at present trading at $7.49 per share, a 15.81% premium of Bitcoin. GBTC is the first-ever publicly cited security exclusively capitalized in and extracting price from Bitcoin, and since its listing it has been seen to trade at a rocket-high premium, having massive triumph at 2020 high, with 41.42% being the highest value that touched in February. Lately, the Grayscale Bitcoin Trust Fund (GBTC) premium to net asset value touched its lowermost level since November 2018. This premium depicts that dealers are paying more for GBTC shares than the original Bitcoin amount reserved by the fund.

Presently, GBTC is the principal cryptocurrency registered investment fund with assets worth $3.5 billion, under the management, summing over 386,000 BTC under the safekeeping. Therefore, it is designated as a pertinent gauge of investors’ craving. The trust started trading openly in 2015 under the figure GBTC and is presently known as the Grayscale Bitcoin Trust. The trust’s primary aim is to trace the fundamental value of bitcoin, similar to how other trust checks on the original value of gold or other assets. 

How is the Bitcoin price influenced by GBTC Premium value?

Over the last couple of years, there have been a few instances where the GBTC premium touched the bottommost point and rebounded back up. The major exception was the tarnished November 2018 bang that happened after Bitcoin lost its long-time $6,000 backup. Given the diminishing premium value, stockholders have the full right to enquire if the indication could be envisaging an identical movement. Volume is indisputably the most pertinent metric stockholders track. Although there can be a countless number of reasons for augmented investor interest, there’s nothing optimistic to be collected from diminishing trading movement. This year mid-July marked the lowest levels in twenty months, and now the premium value has boomeranged back to 9%.

The 3-month straightforward GBTC premium value displays three radically diverse scenarios, designated by extreme hope in January 2020 at 2%, and massive pessimism in April 2020 at -1%. BTC futures trading price is a distinctive indication of distress from professional stockholders.