Biggest Bitcoin Fund Just Hit Record -35% Discount - A Warning For BTC Price?

Institutional interest in Grayscale Bitcoin Trust continues to decline 10 months after the start of the crypto bear market.

For investors, GBTC has long been a great alternative to gain exposure in the Bitcoin market despite its 2% annual management fee. This is mainly because GBTC is easier for institutional investors to hold as it can be managed through a brokerage account.

For most of its existence, GBTC has traded at a steep premium to spot Bitcoin prices. But it started trading at a discount after the launch of the first North American Bitcoin exchange-traded fund (ETF) in Canada in February 2021.

Unlike an ETF, the Grayscale Bitcoin Trust does not have a redemption mechanism. In other words, GBTC shares cannot be destroyed or created based on fluctuating demand, which explains its heavily discounted prices compared to spot Bitcoin.

Grayscale's efforts to convert its ETF trust failed after the Securities and Exchange Commission's (SEC) rejection in June. In theory, the SEC's approval could have reset GBTC's discount from current levels to zero, generating profits for those who bought the stock at cheaper rates.

Grayscale