Earlier this Monday, Grayscale Investments announced plans to turn Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund. 'until recently, GBTC was one of theonly investment funds for institutions and individual investors. However, in a context of increasing competition, the high management fees and strict blocking periods have fallen out of favor with many investors . Since February, GBTC had continued to trade at a negative premium, meaning the fund was trading below the price of Bitcoin.
At the end of 2020, GBTC's premium soared to 50% thanks to surging institutional demand Bitcoin's premium fell to an all-time low of -14.34% earlier last month. This significant drop was likely the necessary wake-up call for Grayscale to turn its increasingly obsolete investment product. In a blog post , the investment firm said it is" 100% committed "to converting its Bitcoin fund into an ETF.
According to the grayscale, the company had applied for a Bitcoin ETF with the Securities and Exchange Commission (SEC) in 2016 and 2017. "[T] 's regulatory environment for digital assets had not advanced to the point where such a product could be successfully brought to market, "Grayscale said. They were probably right, because at the time, Bitcoin's institutional interest was at stake. better limited. However, as Canada approved Bitcoin ETFs earlier this year and Fidelity recently joined the race, the time seems right for Grayscale to finally revamp the GBTC.
Why Grayscale Bitcoin Trust premium remains in a downtrend
announcement Monday, GBTC stock rebounded 5% as the prime fell from -9.32% to -3.78% - perhaps indicating renewed confidence on the part of institutional investors. However, the premium fell to -8.35% on Tuesday. Institutions may have closed their heavily leveraged positions at the top, at the end of their 6 month blocking periods.
Grayscale Bitcoin Trust ($ GBTC) on Tradingview.com
Selected image from UnSplash
