On May 21, with the potential approval of several spot ethereum exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC), Grayscale’s Ethereum Trust (ETHE) saw its discount to net asset value (NAV) reach its lowest point since 2021. Grayscale Ethereum Trust’s NAV Discount Diminishes to 2021 Levels About a week ago, Grayscale’s Ethereum […]
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Persistent Discount Plagues Grayscale’s Ethereum Trust as ETF Decision Nears
As May approaches its end, a significant number of market watchers are keen to find out whether the U.S. Securities and Exchange Commission (SEC) will approve a spot ethereum exchange-traded fund (ETF). Although Grayscale retracted its plan to convert its Ethereum Trust into a publicly traded ETF, the fund’s discount to net asset value (NAV) […]
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FTX Nets $1.9B in Solana Sale at $64 per SOL, Discount Price Draws Creditor Scrutiny
In a report informed by individuals close to the situation, the FTX estate has successfully liquidated .9 billion by offloading a considerable amount of solana (SOL), including tokens that were not immediately available due to a vesting schedule. Insiders Say FTX Sold Millions of Locked Solana Tokens at a Deep Discount The bankrupt entity formerly […]
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GBTC Discount Narrows to Zero; Experts Say Return of Premium to NAV Is a Possibility
The recently disappeared GBTC discount may be “a sign of industry maturing and the improved enterprise acceptance of bitcoin.” While some see the disappearance of the discount as pointing to the re-emergence of the premium to the net asset value (NAV), one expert said he sees “the continued parity or even a resurgence of the discount” as real possibilities.
The Impact of Spot Bitcoin ETF Approvals
On or around January 26, the discount to the net asset value (NAV) of the Grayscale Bitcoin Trust (GBTC) narrowed to zero for the first time in nearly three years. Since descending to 44% in June 2023, the discount has gradually shrunk and by Dec. 20, 2023, it had reached the single-digit figure of 7%.
According to Ycharts data, the last time the discount to the NAV was around zero was sometime around February 21, 2021. The gradual disappearance of the GBTC’s discount to NAV has been attributed to many factors including the spot bitcoin exchange-traded funds (ETF) approval speculation that gripped the crypto market for much of the second half of 2023.
Meanwhile, the disappearance of the discount has prompted some to predict the imminent return of the premium to the NAV. Others, however, have warned that this return to a premium is not a given because crypto assets like bitcoin are still volatile. They argue that the approval of spot bitcoin exchange-traded funds (ETF) alone will not change that.
Nevertheless, some experts, such as Mant Hawkins, the Core Contributor at Andromeda, see the disappearance of the discount as a sign of how far the crypto industry has matured. He cites the U.S. Securities and Exchange Commission (SEC)’s recent approval of spot bitcoin ETFs as proof of the extent to which cryptocurrencies like Bitcoin (BTC) are being adopted.
“I see the narrowing of the discount as a sign of the industry maturing and the improved enterprise acceptance of BTC. The BTC ETF approval decision, as welcome as it was, seems to be just one more slow turn of the adoption wheel,” Hawkins said.
The Return of the GBTC Premium
Another expert, Denis Petrovcic, co-founder and CEO of Blocksquare, said he does not rule out the market reacting to the disappearance of the discount by “pushing it to a premium we have not seen since 2020.” However, Petrovcic also concurred that crypto assets like BTC remain volatile, and not even the ETF hype can change this.
If indeed the GBTC’s premium is to return, Petrovcic said he foresees this ultimately gravitating to back NAV “to compensate for the ETF’s convenience and accessibility.”
Meanwhile, Zak Taher, the CEO of Multibank.io, indicated that he agrees with many of his peers’ views on what the disappearance of the discount likely means. However, Taher also told Bitcoin.com News that while a premium is a possibility, the “continued parity or even a resurgence of the discount are also potential scenarios.”
Andrey Stoychev, head of Prime Brokerage at Nexo explained that from an economic standpoint, one might suggest that the market has achieved a balance between the supply of and demand for GBTC shares. Hypothetically speaking, Stoychev said if inflows and outflows are equal, the present bitcoin price offers the most significant chance for profit realization in the past two years.
“With spot bitcoin ETFs approved, Grayscale investors have now been simply freed to realize gains,” Stoychev told Bitcoin.com News. “Fortunately, that selling pressure has been absorbed by newer market participants and investors, as evident from the disappearance of the GBTC discount. Predicting a meaningful premium is tricky; it depends on Bitcoin demand and industry-wide events, like the upcoming block rewards halving, that could shift supply dynamics and impact the GBTC discount.”
Stoychev added:
Arguably, right now, investors are spoiled for choice on how to gain exposure to Bitcoin. That field, dominated by the world’s leading asset managers, will possibly be characterized by miniscule margins and fierce price competition. Should this be the case, serious deviations toward a premium or discount for GBTC shares are unlikely without a significant, industry-wide event to disturb the markets and force investors into fear or greed.
Before dropping to zero in late February 2021, the digital asset investment product’s premium to NAV ratio had largely stayed above 10%. After the premium turned negative, the price of the GBTC stock also began to drop.
As shown by the data, the price of GBTC fell from one of its 2021 highs of just over to less than in December 2022. However, since then, the price has rallied. At the time of writing, one GBTC share was trading at just above . As of Jan. 30, 2023, GBTC’s BTC reserves are now under 500,000 at 496,573.81 BTC.
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GBTC’s Closing NAV Discount and Steep Fees Trigger Outflows, ETF Analyst Expects ‘More Over Time’
Last week, the U.S. Securities and Exchange Commission (SEC) greenlit the debut of 11 diverse spot bitcoin exchange-traded funds (ETFs), which, in their initial two days on the market, experienced a substantial .65 billion in trading volume. Concurrently, while a host of new entrants enjoyed strong inflows, Grayscale’s GBTC encountered notable outflows, coinciding with the fund’s discount to net asset value reaching its lowest point since February 2021.
Reduced NAV Discount Prompts GBTC Outflows
On Saturday, Eric Balchunas, the senior ETF analyst for Bloomberg, shared insights on the “nine newborn” spot bitcoin exchange-traded funds (ETFs), which have impressively gathered .4 billion in cash. Balchunas observed that this surge in capital markedly outstrips the 9 million outflow from the Grayscale Bitcoin Trust (GBTC), leading to a net investment growth of 9 million. He further noted that these trades boasted an average premium of 20 basis points.
Following his analysis, when queried about the significant withdrawal from GBTC, Balchunas responded:
Lots of [traders] came in to play the discount closing so they [are] leaving to take profits, there’s also captive [average investors] who may have decided to stomach the tax hit in order to flee the 1.5% fee … I’d expect more [over] time.
Balchunas’ observations resonate with the recent outflows from Grayscale Bitcoin Trust (GBTC), as onchain analysts noted a significant movement of 4,000 BTC, valued at 5 million, exiting GBTC’s bitcoin wallet holdings on Friday. This coincides with GBTC’s discount to its net asset value (NAV) reaching its lowest point since February 2021, a stark contrast to its prior premium status before February 23, 2021. Alongside this shift to a more normalized NAV discount, Grayscale’s ETF management fees stand out as the highest among the 11 ETFs approved last week.
Notably, seven of these funds boast management fees below 0.30%, with Bitwise’s BITB leading at a minimal 0.20% fee. Ark’s ARKB, Fidelity’s FBTC, and Blackrock’s IBIT each offer a competitive 0.25% fee, matched by Valkyrie’s BRRR and Vaneck’s HODL. Close behind is Franklin Templeton’s EZBC at 0.29% and Wisdomtree’s BTCW at 0.30%, while Invesco’s fee is slightly higher at 0.39%. Hashdex’s 0.94% fee for its DEFI fund is the only one approaching GBTC’s substantial 1.5% management fee, suggesting that the more favorable fees of these new funds could be a factor in investors’ shift away from GBTC.
Furthermore, an appealing incentive for investors in the U.S. is the temporary waiver of management fees offered by seven of the 11 newly approved spot bitcoin ETFs, allowing early investors to participate without any fees for a limited time. This is a significant change from when GBTC, traded over-the-counter (OTC), charged a 2% management fee, which was reduced in anticipation of its ETF transition. As new entrants strive to emulate Grayscale’s decade-long leadership in this domain, it’s noteworthy that GBTC still holds a formidable 618,000 BTC, dwarfing the recent inflows to these new ETFs by a long shot.
What do you think about GBTC’s outflows? Share your thoughts and opinions about this subject in the comments section below.
Grayscale’s GBTC Witnesses Historic Shrink in Discount to NAV as Metric Taps Single Digits
On Friday, data revealed a notable shift in Grayscale’s Bitcoin Trust, commonly referred to as GBTC, as its discount to net asset value (NAV) contracted to single digits for the first time in 2023. The figures indicate that GBTC’s discount reached 8.06%, a level last observed two years ago.
GBTC Discount to NAV Reaches Single-Digit Territory
Grayscale’s Bitcoin Trust (GBTC) is the largest bitcoin fund in the world and on November 24, 2023, the trust’s total assets under management (AUM) was approximately .50 billion. This year, GBTC suffered a significant discount to net asset value (NAV) and in September 2022, the discount widened by more than 35%. A discount or premium to net asset value (NAV) occurs when the market price of a fund’s shares is lower or higher, respectively than its NAV.
The NAV essentially represents the per-share value of the fund’s assets minus its liabilities, calculated daily. When a fund’s shares trade at a discount, it means they are selling for less than the fund’s per-share asset value. A significant discount like 35% to NAV is not favorable as it indicates that the fund’s shares are being traded at a significantly lower price than the actual value of the assets they represent.
Nevertheless, following Grayscale’s triumph over the U.S. Securities and Exchange Commission (SEC), there has been a significant reduction in the discount. Bitcoin.com News reported in mid-October that this margin had decreased to 16.59%. Marking a milestone, GBTC reached the single-digit territory at 9.77% on November 22, 2023, as reported by ycharts.com, for the first time in two years.
Statistics for November 24, 2023, indicate the discount to NAV dipped down to 8.06% on Friday afternoon. Upon reaching the noteworthy single-digit record, both the cryptocurrency community and financial analysts turned their attention to this development.
“GBTC’s discount is in single digits for the first time in over two years, it had been flirting [with] this barrier for a while and finally broke through 10% [Wednesday] night and is [currently] 8.6%, likely prompted by their updated filings/SEC meeting reported [Wednesday],” the senior ETF analyst for Bloomberg Eric Balchunas said on the social media platform X. Another observer remarked that they could “smell a spot ETF in the air” in response to the achievement of the discount to NAV milestone.
On the same Friday afternoon, Bloomberg ETF analyst James Seyffart echoed insights akin to those of Balchunas. “Right now GBTC is trading at a record low discount for the last few years of about 8.6%. Its official closing discount was 9.7% on Wednesday,” Seyffart wrote. “Hasn’t been this close to parity since July 2021 — just months after the premium broke into discount,” the ETF strategist added.
What do you think about GBTC’s discount tightening? Share your thoughts and opinions about this subject in the comments section below.
Bitcoin Skyrockets, Yet South Korea Experiences a ‘Kimchi Discount’ Instead of the Usual Premium
Bitcoin has soared, doubling its value since the start of the year. Yet, intriguingly, the famed “Kimchi premium” in South Korea remains absent in this current surge of bullish activity. This is a notable deviation from previous bull markets, where the phenomenon was prominently observed. In fact, this time around, BTC prices in South Korea are trading at a discount compared to other parts of the world.
Despite the Won Ranking as the 5th Largest Bitcoin Trading Pair, South Korea Sees Unprecedented ‘Kimchi Discount’
This month, bitcoin has exhibited remarkable performance, appreciating 27.9% against the U.S. dollar. As of 10:15 a.m. EDT, BTC hovered just above the K mark, boasting a seven-day gain of 14.8%.
Intriguingly, during this upward trajectory, bitcoin prices on South Korea’s top crypto exchanges, Upbit and Bithumb, are slightly lower. This scenario stands in stark contrast to the “Kimchi premium” observed in previous years, which typically manifested during crypto bull runs, pushing BTC’s value several hundred dollars above the global average.
Currently, bitcoin trading is thriving in South Korea, with cryptocompare.com data revealing that BTC is the fifth largest trading pair in the country, accounting for 3.73% of all BTC’s global trades.
Despite BTC’s global trading price of ,059 at the time of writing, it is exchanging hands at ,902 on Upbit and approximately ,869 on Bithumb. This translates to a 7 and roughly 0 per unit discount on Upbit and Bithumb, respectively.
Contrary to the “Kimchi premium,” where not just BTC, but also other cryptocurrencies like XRP and ETH would experience price elevations, the current discounts are uniquely impacting bitcoin’s value.
Ethereum, for example, is exhibiting a minor discount discrepancy of around -15 per unit. On the trading front, Bithumb recorded approximately 8 million in global trades on Friday, while Upbit saw a much higher .7 billion. Among Bithumb, Coinone, and Korbit, Upbit dominates in the country, commanding nearly 80% of South Korea’s crypto trading volume.
South Korea’s government and regulators from the country have tried to curb the “Kimchi premium” and put the trend to an end. While there is no sign of a premium, a “Kimchi discount” still brings an opportunity for arbitrage.
What do you think about the lack of the “Kimchi premium” during bitcoin’s current upswing? Share your thoughts and opinions about this subject in the comments section below.
Grayscale’s Bitcoin Trust Discount to NAV Narrows Sharply to a 16.59% Gap
Grayscale’s Bitcoin Trust, known as GBTC, has witnessed a significant shift in its market dynamics. In January 2023, GBTC traded at a significant 48.31% discount to its net asset value (NAV). Today, that gap has narrowed to 16.59%, indicating changes in market sentiment and presenting potential implications for investors.
End of 2023 Sees GBTC’s Discount to NAV Tighten
The largest bitcoin (BTC) trust known as GBTC has seen a significant improvement in terms of its previous discount to NAV. Essentially, net asset value (NAV) serves as a financial barometer, indicating the per-share value of a fund’s underlying assets. In the context of GBTC, the NAV represents the value of BTC it holds, adjusted for liabilities, and divided by its outstanding shares. Simply put, it’s a measure of what each GBTC share should theoretically be worth based on bitcoin’s market value.
GBTC’s market price can deviate from its NAV, leading to either a discount or premium status. When GBTC trades at a higher price than its NAV, it’s at a premium. Conversely, if it trades lower than its NAV, it’s at a discount. This percentage difference provides insights into market perceptions and investor sentiment around GBTC. Since the end of February 2021, GBTC has traded at a discount to its NAV. Unlike traditional stocks, GBTC doesn’t offer an easy way to redeem shares for actual bitcoin, and shares are traded over-the-counter (OTC).
This structure can cause its market price to diverge from the underlying BTC value. External factors, such as investor sentiment, market speculation, regulatory news, and liquidity considerations, can further influence this price disparity. A 48.31% discount in January 2023 meant GBTC shares were trading significantly below the value of the bitcoin they represented. Investors could have been acquiring bitcoin exposure via GBTC at a bargain.
Fast forward to the present, and the discount has reduced to 16.59%, suggesting a change in market dynamics and a potential increase in demand for GBTC shares. The shrinking discount implies a potential positive shift in GBTC’s market sentiment. For investors, buying GBTC at a discount might seem like a lucrative deal, as they gain exposure to BTC at a reduced price. However, the future remains uncertain, and there’s no guarantee that the discount will continue to narrow at the same pace or even flip to a premium.
At the moment, Grayscale is fervently working to persuade the U.S. Securities and Exchange Commission (SEC) to transform GBTC into an exchange-traded fund (ETF). With a nudge from the judiciary, Grayscale has carved out a bit of wiggle room in this endeavor, but the outcome is still hanging in the balance. Simultaneously, the SEC is sifting through more than half a dozen spot bitcoin ETF proposals from industry giants such as Fidelity, Blackrock, and Franklin Templeton.
What do you think about GBTC’s discount tightening? Share your thoughts and opinions about this subject in the comments section below.
GBTC’s Discount Narrows Amid Bitcoin’s Downturn, But A Bullish Trend Is Coming?
The Grayscale Bitcoin Trust (GBTC) share price has again made headlines. Its premium or discount to Bitcoin’s net asset value (NAV), often viewed as an indicator of institutional sentiment towards the cryptocurrency, has displayed a notable trend recently, even amid the prevailing bearish atmosphere.
GBTC’s Evolving Price Dynamics
The phenomenon of GBTC’s share price inching closer to Bitcoin’s market price is worth noting. The correlation between the two has been historically significant, with price differences often shedding light on broader market sentiments.
According to data from CoinGlass, a renowned crypto monitoring platform, the GBTC shares were recorded trading at a 17.17% discount to the BTC/USD rate as of September 9th, the last update.
Such levels haven’t been witnessed since December 2021, highlighting a potentially shifting sentiment in the market. The so-called “GBTC Premium,” previously a surplus, has been a discount to the net asset value for a while now.
The shift was drastic at one juncture that the differences neared roughly 50% last November. Such variance has led to a divergence between GBTC’s performance and Bitcoin’s price strength, especially as Bitcoin revisits price zones it hasn’t seen in the past six months.
What This Could Mean For Bitcoin
The narrowing of GBTC’s discount isn’t just an isolated event. It paints a broader picture of potential market sentiment shifts and future movements.
Notably, a shrinking discount can be interpreted as a sign of growing institutional interest, as the GBTC serves as a prominent avenue for institutions to gain exposure to Bitcoin without directly holding the asset. If institutional interest is indeed on the rise, this could bode well for Bitcoin’s mid to long-term price outlook.
Nevertheless, Bitcoin is currently seeing a downtrend. The asset has plunged nearly 15% in the past month and 2% in the last 24 hours. As a result, its price has fallen below the recently established ,000 mark, trading at ,175 at the time of writing.
According to Cryptocon, a trader and analyst, Bitcoin might see a weaker performance this month as October often brings a turnaround and more decisive price action.
September is historically a pretty bad month for #Bitcoin, that’s just the facts.
October is historically very bullish.
But maybe, it’s November that will bring the turn around we need according to our performance since the halving dates.
To be… pic.twitter.com/Olg0XHVxKG
— CryptoCon (@CryptoCon_) September 11, 2023
This perspective aligns with a prevalent crypto community theory that marks November 28th as a quadrennial “bull run launch” for Bitcoin.
Featured image from iStock, Chart from TradingView
Binance US Arbitrage: Social Media Users Say BTC Discount Not Indication of an Opportunity
For several days since Binance US announced the resumption of withdrawals, bitcoin (BTC) has changed hands at a discount and was trading at more than ,500 below the prevailing market price on July 10. The emergence of a discount on crypto assets paired with USD on Binance US has fueled speculation about the affiliate’s future and the fate of users’ funds.
Stablecoin Asset Pairs Tracking the True Value of Crypto Assets
On July 10 the BTC/USD value on the beleaguered crypto exchange Binance US stood at just over ,500, about ,500 below the price prevailing on other centralized exchanges. In contrast, when paired with the stablecoin USDT, the top cryptocurrency’s value of just over ,100 on Binance’s affiliate in the U.S. was consistent with that on other exchanges.
In fact, as shown by data on Binance US, most crypto assets listed on the platform have also been trading at a discount in USD terms. Yet, when paired with the stablecoins USDT and USDC, many of the crypto assets appeared to track their true values. While news of BTC and other crypto assets’ discounts was one of the most trending topics on Twitter on July 9, recent data on the trading platform indicates that these price discrepancies initially emerged around June 21.
The emergence of a discount on all assets paired with USD is seemingly the direct opposite of what happened when the U.S. Securities and Exchange Commission sought to freeze user assets via a court motion. As reported by Bitcoin.com News in early June, the BTC/USD value on Binance US was ,444 higher per bitcoin than the average global exchange rate. Ethereum was also trading at a premium of 0.
The Existence of Arbitrage May Indicate Deeper Problems
In the meantime, the emergence of a discount on all crypto assets paired with the USD appears to be linked to the crypto exchange’s banking partner challenges. In its message to users on June 23, Binance US said it expected its banking partners to discontinue the USD withdrawal service. At the time, the affiliate encouraged “users to use, withdraw, or convert their USD fiat balances to stablecoins to continue crypto-to-crypto trading on the platform.”
$BTC is trading 00 lower on Binance US & $ETH is trading 0 lower. I don’t think this is an arbitrage opportunity. It’s too obvious and it smells like something is seriously wrong. Again, this is Binance US. Just US version. Don’t freak out yet. pic.twitter.com/6WS9y6bMjD
— Max (@MaxBecauseBTC) July 8, 2023
On Twitter, the emergence of a discount on crypto assets paired with the USD has on one hand fueled speculation about the affiliate’s future and the fate of users’ funds. On the other hand, users have questioned the apparent discount on nearly all assets paired with the USD. For example, a user by the name of Max said the price discrepancies on Binance US may not be an indication of an arbitrage opportunity. Another user named James Foura characterized the supposed arbitrage opportunity as one-way trade.
“People keep talking arbitrage on Binance US … it’s a one-trip trade folks. Getting money back in requires crypto that has to be bought at higher prices elsewhere. So it’s basically a wash unless you want to dump your crypto. Can anyone find parity on Coinbase,” Foura said in a tweet.
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