The largest investment vehicle in bitcoin, Grayscale Bitcoin Trust (GBTC) is now trading at its biggest discount to the spot market in its history.
Data from on-chain analytics resource Coinglass shows that GBTC shares are down 34% against the BTC/USD pair on major exchanges as of June 17.
GBTC suffers during market downturn
Amid ongoing turmoil in DeFi spilling over into the cryptocurrency market, conditions have deteriorated for investors large and small.
The latest figures show that institutions have definitely failed to prevent contagion, and the already unprofitable GBTC has hit new lows.
GBTC’s premiumlong a misnomer because the fund’s shares actually cost less than bitcoin itself, is hovering around its lowest values in history. On June 17, they were trading 34.2% cheaper than the bitcoin spot price (also known as net asset value or NAV)..
A sharp drop accompanied a similar decline in spot markets as the BTC/USD pair retested $20,000 twice..
As Grayscale seeks permission from U.S. regulators to convert GBTC into a bitcoin spot exchange-traded fund (ETF), Conditions remain unfavorable for institutional cryptocurrency products amid heightened government attention in the wake of the Terra and Celsius crashes.
Although the company remains optimistic about the prospects, GBTC’s performance has not escaped commentators, who criticize regulators for what they see as an inaccurate assessment of risk.
Bitcoin Spot ETFs Remain Banned in the US Due to Investor Protection Concernsallowing countries like Canada and Australia to gain first-mover advantage.
Shares of $GBTC are now 66.9% lower than they were at the peak of 2017 despite $BTC trading 5% higher.
Make sure to thank Mr. Gensler for the protection of everyone. pic.twitter.com/Q1cAw8hBtR
— Dylan LeClair (@DylanLeClair_) June 16, 2022
GBTC shares are now 66.9% lower than at the 2017 peak despite BTC trading 5% higher. Be sure to thank Mr. Gensler for everyone’s protection. pic.twitter.com/Q1cAw8hBtR
“Without ETF Approval, GBTC May Go At -100% Premium Over NAV”, joked Vijay Boyapati this week.
Hayes Names D-Day for Crypto Market Bottom
This situation is not helped by the liquidity problems reported in multiple cryptocurrency funds with exposure to those already facing serious losses.. Beleaguered Three Arrows Capital (known as 3AC), for example, is the largest holder of GBTC with more than 38.8 million shares.
As 3AC fails to meet margin call requirements this week, a stark gap is opening up between GBTC and its competition. The ProShares Bitcoin Strategy ETF (BITO), the first US-approved ETF based on Bitcoin futures, has even added BTC to its assets under management in recent days.
For Arthur Hayes, former director of the derivatives giant BitMEX, some of the biggest names in institutional cryptocurrency investing are facing a “river styx” moment.
In his last blog post on June 17, Hayes again criticized the beleaguered Celsius, Terra and other projects.
“As this cohort of companies is forced to spew out any assets that aren’t locked into some long-term performance strategy, watch out for what comes next”he predicted.
“A more wholesale sale of all liquid assets on their loan books will take place so that these lending firms can return the assets to their retail depositors.”
Having previously expected a bottom of $1,000 for Ether (ETH) and $25,000 for bitcoin, Hayes acknowledged that the reality had been much worse..
The 4th of July holiday weekend, he added, should provide ideal conditions for a macro fund, especially as the second quarter draws to a close..
“June 30 to July 5 is going to be a wild ride down”the blog article continues.
“My bottom levels of $25,000 to $27,000 bitcoin and $1,700 to $1,800 Ether are in tatters. How far can we go? I think we will find out in this fateful weekend.”
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