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- 73 cents for $1
- It’s not that simple
The Grayscale Bitcoin Fund is one of the first solutions for institutional investors willing to gain exposure to the rapidly emerging cryptocurrency market. But due to the fund’s performance and Bitcoin’s market history, Grayscale’s GBTC discount has reached 26%.
73 cents for $1
As a well-known Bitcoin critic and founding member of the EuroPac Gold Fund suggest, both retail and institutional customers can buy digital gold with the help of GBTC funds and pay only 73 cents for 1 Bitcoin.
Why buy? #Bitcoin in the market when you can buy all the Bitcoin you want $GBTC with 73 cents on the dollar? If institutions are indeed buying Bitcoin, why do the people already invested in GBTC want to get out and why don’t other institutions want to buy at a discount?
– Peter Schiff (@PeterSchiff) January 18, 2022
Such an imbalance is due to a negative premium ratio indicating that GBTC’s reported accounting NAV is trading at a discount to the exchange value of the fund. While you won’t be able to find GBTC on markets as widely as the NYSE, it is still available for OTC trading on various platforms.
It’s not that simple
But Schiff’s assumption of low demand for Bitcoin due to no buying interest may not be so accurate, as the community under the economist’s Twitter post has suggested. First and foremost, to gain exposure to digital assets through the Grayscale Bitcoin Trust, individuals must be willing to pay at least $50,000 for an investment that may be too large for the general public.
For institutional investors, some community members suggest that large market participants should get their liquidity through futures-based exchange-traded funds rather than liquid solutions. OTC methods are illiquid.
While a futures-backed ETF is not a panacea for institutional crypto investors, it is still a more popular solution than OTC funds, according to institutional threads above. market.
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