When GBTC began experiencing discounts of over 20% in October 2021, it filed for a formal application with the US SEC for a possible conversion of the product.
According to a report by Glassnode, Grayscale Bitcoin Trust (GBTC) concluded the last week with a massive discount of 21.36%.
The record high discount on GBTC has allowed investors to buy the shares at impressively low prices than the current market value of Bitcoin. On the contrary, the present shareholders witness significant beatings owing to the 6-month locked-up period since the earlier acquisition.
According to the statistics on the Grayscale website, the prices of Grayscale Bitcoin Trust shares plunged to 3.46% the previous Friday, registering a $43.77 rate per share. While the price of a single GBTC is equivalent to 0.00093202 BTC, the stock’s exact price was $34.42 in Bitcoin, which has dipped to 5.21% from the earlier trading assembly. The difference in the two price shifts discloses an underlying effect of the discount.
Over the weekend, Bitcoin wasn’t able to deliver any major twists, therefore, analysts predict that the market will bottom soon. The dip has intensified the purchase of Bitcoin among small retail investors, however, seasoned market investors are yet to feel hopeful about the Bitcoin price graphs.
GBTC is a closed-end fund, a mutual investment standard based on allocating a specific number of shares that are not cashable from the fund. Consequently, the price of each share is calculated mainly by looking at the supply and demand, instead of the principal value of the asset.
Grayscale Bitcoin Trust was founded in 2013 and has risen up to become one of the most preferred products of digital asset manager Grayscale Investments. At present, the GBTC possesses approximately assets worth $30Billion. In the past, GBTC has carried out trading operations at a considerable premium compared to the market price of Bitcoin. However, soon after February, the price of the stock started dipping due to the launch of multiple Bitcoin exchange-traded funds (ETFs) in Canada.
Grayscale Plans to Convert GBTC into an ETF
Owing to the immense pressure from the existing investors, Grayscale wants to switch the discount by converting GBTC into a complete Bitcoin Exchange Traded Fund (ETF). When Grayscale’s flagship product began suffering discounts of over 20.53% in October 2021, it decided to file for a formal application with the US Securities and Exchange Commission (SEC) for a possible conversion of the product.
SEC has, however, rejected many applications to offer a Bitcoin ETF in the past. Last week, the SEC postponed a judgment on GBTC and Bitwise Bitcoin ETF acknowledging that it needs at least 45 days to examine the associated proposals. Before this, the SEC has denied another application for a Bitcoin ETF, pointed by New York-based ETF issuer WisdomTree.
Notwithstanding the rejections from the US regulatory committee, the surge in the demand for an ETF by actual Bitcoin has been advocated by US exchange Coinbase, when it supported the proposal put forward Grayscale to convert the GBTC into a Bitcoin ETF.