GBTC Discount Down To Zero

GBTC Discount Down To Zero

According to experts, the fact that the GBTC discount disappeared recently could be a sign of the crypto industry hitting maturity and also point towards a widespread acceptance of Bitcoin.

Some said that this disappearance could see the premium to the net asset value (NAV) re-emerge, but others said that there was also a possibility of the discount’s resurgence, or the continued parity.

The decline

On January 26th, 2024, for the first time in three years, the Grayscale Bitcoin Trust (GBTC) saw its discount to the net asset value (NAV) narrow to zero.

In June 2023, the discount had descended to 44% and had continued shrinking. By December 20th, 2023, the discount had reduced to a single digit figure of 7%.

The data shows that the last time the discount to the NAV value had been zero was close to February 21st, 2021.

There are a number of factors said to be responsible for the gradual disappearance of the GBTC discount, which include the speculation associated with spot Bitcoin ETFs in the second half of 2023.

Meanwhile, due to the discount’s disappearance, some have predicted that the premium to the NAV is likely to make an imminent return.

The possibilities

However, others have warned that it is not a given that there will be a return to the premium because there is still a great deal of volatility associated with Bitcoin and other crypto tokens.

They have argued that the approval of spot bitcoin exchange-traded funds (ETF) is not enough to change things.

However, some experts have said that the disappearance of the discount points towards the maturity of the crypto market.

The fact that the US Securities and Exchange Commission (SEC) approved to spot Bitcoin ETFs is proof that cryptocurrencies, such as Bitcoin, have become widely adopted.

The premium return

According to another expert, there is a possibility that the disappearance of the discount might lead to the return to a premium that has not been seen since 2020.

But, it is important to note that crypto tokens like Bitcoin remain highly volatile and even ETFs cannot change this fact.

If the premium does return, experts believe that this could eventually gravitate to back NAV to compensate for the accessibility and convenience of ETFs.

Some experts think that the return to the premium is a possibility, but the re-emergence of the discount can also happen as can the continued parity.

As far as the economic perspective is concerned, it shows that the market has managed to achieve a balance between the demand and supply of GBTC shares.

If inflows and outflows remain equal, then the present price of Bitcoin offers the most significant possibility of realizing profits in the next two years.

The approval of spot Bitcoin ETFs has finally allowed Grayscale investors to realize their gains.

Luckily, the newer investors and market participants have absorbed the selling pressure, which is evident from the disappearance of the GBTC discount.

The possibility of a premium would also depend on the demand of Bitcoin as well as the events taking place in the crypto industry.