A new report by crypto insights platform ByteTree indicates institutional investors may be at an impasse over Grayscale’s Bitcoin Trust (GBTC) premiums.
According to the latest edition of ByteTree’s Market Health Update, the arrival of institutional investors has been a game-changer for bitcoin. The report claims that institutions have purchased more bitcoin since last May’s halving than miners have generated (380,644 BTC vs 309,557), leading to strong price gains for the cryptoasset.
However, a large portion of institutions has gained exposure to bitcoin via Grayscale’s flagship GBTC, thereby attaining security and legal clarity for the funds. ByteTree claims roughly 81% of institutional bitcoin purchases since the last halving has come in the form of GBTC.
The report shows GBTC is now trading at a discount, which negates the incentive for institutions to subscribe to new shares. More investors are attempting to sell their GBTC than buy, resulting in the fund acquiring less new BTC.
The report reads:
With luck, this is a GBTC problem and does not spread, but I believe it is important for the space to hold its service providers to account. Unless GBTC takes action to close their discount and maintain it, the selling pressure will build, which could morph into a systemic risk.
ByteTree’s analysts hypothesize that an exchange-traded fund (ETF) may correct the issue with GBTC, and predicts the product will be available (sooner or later) given the abundance of applications filed.
The report concludes:
When the GBTC discount first appeared a few weeks ago, there were cries of buying the dip. I am not so sure, and for the sake of the Bitcoin space, I very much hope they restore investor confidence without delay.
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