The bitcoin (BTC) investment vehicle Grayscale Bitcoin Trust (GBTC) is trading close to 50% below the price of BTC on the spot markets.
Data from the on-chain analytics platform Coinglass confirms that GBTC shares hit a new all-time low of -47.2% against BTC/USD on Dec. 8.
GBTC woes pile up after FTX collapse
In the latest nervous breakdown to hit the bitcoin industry since the FTX crash, GBTC is close to half its price against the bitcoin price.
GBTC, the largest institutional Bitcoin investment vehicle, with assets valued at about $10 billion, has faced numerous problems in recent years.
Its share price was previously trading above the BTC/USD pair, giving rise to what was called the “GBTC premium.” However, since 2021 that premium has turned negative, and the resulting “discount” has done little to attract additional institutional interest.
As Cointelegraph reported, beyond a few key exceptions like ARK Invest, GBTC languishes as Grayscale, part of Digital Currency Group (DCG), tries to turn it into an exchange-traded fund (ETF), suing US regulators who stand in its way.
In the middle of the legal battle, FTX has caused liquidity problems in other parts of the DCG empire, raising questions about Grayscale and GBTC. Grayscale refused to show proof of its BTC reserves last monthdespite custodian Coinbase confirming that its assets were safe, increasing tensions.
“Grayscale is in real trouble if they have to reveal where all the bitcoins backing the GBTC are,” wrote the popular Bitfinex’ed part of a Twitter discussion on the subject this week.
This week, things got even worse, as Grayscale faced a lawsuit from investor Fir Tree for what it calls “shareholder-hostile actions.”
For his part, general interest in cryptocurrency ETFs has plummeted this year, suggest separate data.
Woo: There are “partially bullish” issues for bitcoin
With that, GBTC’s premium, which has barely recovered from previous record lows, plunged further against bitcoin, known as its ratio to net asset value (NAV).
“$GBTC discount to bitcoin NAV is in the express elevator to hell. => sentiment = bearish”, summarized Timothy Peterson, Investment Manager at Cane Island Alternative Advisors.
Others lamented that the slow pace of change in the US had fueled the fire.
“Much of the pain this year would have been avoided if GBTC had become an SEC ETF keeping everyone safe!”, reacted investor and entrepreneur Alistair Milneechoing the popular sentiment of recent weeks.
Willy Woo, creator of the statistical resource Woobull, argued that the impact of GBTC exposure fading was not necessarily a direct negative for BTC price strength.
“GBTC/DCG/Genesis fear is a bearish cloud hanging over the market. But counterintuitively, part of the impact has been bullish for BTC price”, tweeted l December 5th.
“37.5% of people who sold GBTC bought BTC spot to take custody. Selling GBTC does not affect the price of BTC; buy spot, yes.”
A further poll on Twitter questioned users of the platform who theoretically own GBTC about their motives for selling.
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