Grayscale Bitcoin Trust Premium Dissolves as More Funds Enter Market

Getting exposure to bitcoin via the Grayscale Bitcoin Trust (GBTC) once cost you a 40% premium. Today, that figure dipped to negative 1.5% at one point, before rebounding. A higher premium is indicative of the interest in the market in betting […]

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key takeaways

  • Grayscale’s Bitcoin Trust was once the most popular way for institutional investors to get exposure to bitcoin.
  • With the introduction of new funds on to the market, Grayscale’s premium had to be adjusted accordingly

Getting exposure to bitcoin via the Grayscale Bitcoin Trust (GBTC) once cost you a 40% premium. Today, that figure dipped to negative 1.5% at one point, before rebounding.

GBTC premium over time (Source: Skew)

A higher premium is indicative of the interest in the market in betting on the price of bitcoin via Grayscale. Investors are willing to pay the premium in exchange for custody and security. 

Although the SEC has not yet approved a bitcoin ETF, the bitcoin fund market has become increasingly crowded. Recently, BlockFi announced that it had filed with the SEC to create a bitcoin trust investment vehicle.

Toronto-based Ninepoint Partners recently established a bitcoin trust with an asset value of $180 million ($230 million CAD), with the option for a Canadian dollar denominated fund to meet demand from investors in-country that don’t want forex exposure on their investment.

Vancouver-based 3iQ also has a Canada-listed bitcoin as well as ethereum fund. 

According to Tom Lombardi, managing director of 3iQ, his company says it has a path to list its bitcoin fund on an exchange in New York. Lombardi says this is possible through the Multijurisdictional Disclosure System (MJDS), which allows eligible Canadian companies to offer securities for sale in the U.S as long as they offer a prospectus.

Lombardi points out that 3iQ’s funds use a prospectus — a rarity in the sector — giving them a huge advantage when it comes to listing applications and investor eligibility. 

Should 3iQ be successful in its application, this will further constrain the ability of funds like Grayscale to be able to charge a large premium given the competition in the market — particularly as institutions enter a ‘HODL’ mode versus actively trading.  

Bitcoin began the week up 2.7% at approximately $33,500 following a strong trading day Monday in Asia, and positive sentiment from Elon Musk who said in a Clubhouse session during the weekend that he’s a “huge supporter” of the cryptocurrency.

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