Re: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!
Here's a interesting comment on seekingalpha about the current GBTC discount:
https://seekingalpha.com/news/3669426-mulling-bitcoin-and-100k-is-grayscales-discount-a-buy-signal
"Three reasons Grayscale (GBTC) is trading at a whopping big discount to the bitcoin it owns: (1) New ETF products that don't charge a hefty 2% annual fee for holding your bitcoin may soon appear. (2) GBTC is not redeemable. If the GBTC discount becomes excessive, Grayscale still owns the bitcoin, but existing shareholders get nothing and can't get the bitcoin out. So far as I know, there is no mechanism to bring the share price into line with the bitcoin price, which is why Im not buying any more GBTC. (3) ARKK is likely being forced to liquidate its holdings due to redemptions. As ARKK holds its bitcoin in GBTC, forced sales into a declining market could be pushing down GBTC to a huge discount."
I had not considered the sale pressure from a possible ARK liquidation. I double checked ARK ETF's that have GBTC, and it is not ARKK. It is in ARKW (ARK NEXT GENERATION INTERNET ETF), where GBTC is the 3rd largest position (after Tesla and Square), at 8,309,914 shares with market value of $344,030,439.60 for 4.77% weight of the fund.
GBTC has Shares Outstanding 692.3M, so ARKW holds 1.200% (8.309914M/692.3M). I'm not sure if ARKW selling a bit of their a little over 1% would cause such a large drop in GBTC premium.
But in any case, I think it might be a good time to add some GBTC!
https://seekingalpha.com/news/3669426-mulling-bitcoin-and-100k-is-grayscales-discount-a-buy-signal
"Three reasons Grayscale (GBTC) is trading at a whopping big discount to the bitcoin it owns: (1) New ETF products that don't charge a hefty 2% annual fee for holding your bitcoin may soon appear. (2) GBTC is not redeemable. If the GBTC discount becomes excessive, Grayscale still owns the bitcoin, but existing shareholders get nothing and can't get the bitcoin out. So far as I know, there is no mechanism to bring the share price into line with the bitcoin price, which is why Im not buying any more GBTC. (3) ARKK is likely being forced to liquidate its holdings due to redemptions. As ARKK holds its bitcoin in GBTC, forced sales into a declining market could be pushing down GBTC to a huge discount."
I had not considered the sale pressure from a possible ARK liquidation. I double checked ARK ETF's that have GBTC, and it is not ARKK. It is in ARKW (ARK NEXT GENERATION INTERNET ETF), where GBTC is the 3rd largest position (after Tesla and Square), at 8,309,914 shares with market value of $344,030,439.60 for 4.77% weight of the fund.
GBTC has Shares Outstanding 692.3M, so ARKW holds 1.200% (8.309914M/692.3M). I'm not sure if ARKW selling a bit of their a little over 1% would cause such a large drop in GBTC premium.
But in any case, I think it might be a good time to add some GBTC!
I'm not sure why everyone leaves this out, but don't forget that you're comparing the spot price of the secondary market (closing price of BTC Trust shares at 4PM ET on OTCQX®) to the BTC's volume weighted average price for the last 24hr (based on a 24 hour VWAP of TradeBlock’s XBX Index) which is really not an ideal comparison. When markets go down during the day your spot at 4pm will almost always be lower than the average, same is true for the opposite, market sharply going up means your spot at the end of the day is likely higher then the avg for the last 24hrs (weighted by volume). Looks like spot TradeBlock’s XBX on March 4th 4pm was around $48.192 (https://tradeblock.com/markets/index conveniently they're also showing GDAXs discount at -8,01% today) with Bitcoin per Share at 0,00094685 that would put BTC's spot NAV at $45,63 vs $46.83 (March 4th 4pm ET, based on a 24 hour VWAP of TradeBlock’s XBX Index). There's still a discount but it narrows the gap.
As far as speculating on the reasons, GBTC fees are 2% while Canada's ETF BTCC (TSX) appear to be 1% and EBIT (TSX) is at 0,75%, naturally once you have an option people would gravitate towards lower fee structures. I might be mistaken, but i don't think Canada's market are an option for US retirement accounts
so until US ETF comes around GBTC (or similar fund) is your only option. GBTC is now closed and doesn't issue new shares, so inflows from retirement accounts into GBTC must absorb temporary outflows from regular accounts leaving for Canada. But there's a lag of people who bought at the primary and are currently locked in for 6month, so as long as there's net demand from pensions for exposure to BTC, discount might continue for the maximum of 6month (baring US ETF).tl;dr without US ETF discount should be temporary for the max of 6m. With the fiat printer going full Brrrr i'd be surprised to see US approve ETF, I'd expect them to hold out for as long as possible.