- GBTC hasn’t kicked off the year to a great start as the trust has lost 17% of its value since Jan 1, 2022
- Currently, the price of GBTC is 26.5% lower than the value of Bitcoin it holds
- GBTC sells more than ProShares strategy-based ETF, BITO
The launch of ETFs & trust funds was expected to bring the cryptosphere into the mainstream by giving an opportunity to folks who weren’t interested in going through the hassle of storing their key to their tokens but still desired to be exposed to the gains scored by the crypto spectrum. While major ETFs & trust funds held tokens like Bitcoin seem to be in a gully for weeks, their loss in share price only comes to their price tokens.
GBTC faced a significant crash
The $27 billion Grayscale Bitcoin Trust trading under the ticker of GBTC hasn’t kicked off the year to a great start as it has plummeted more than 18%, since January 1, 2022. The crash comes in consequence to the exterior cryptocurrency gully where Bitcoin has lost nearly 9% of its value while currently trading at $41,818.
The Trust closed at 26.5% lower at price in contrast to its Bitcoin holdings where the crash in Bitcoin had only widened its gap of discount levels. Usually, trust funds & ETFs are a more polarized format of price actions performed by the tokens, especially when trust funds like Grayscale hold actual Bitcoins in storage.
The president of Spectra Markets, Brent Donnelly mentioned that GBTC had kept breaking hearts as the discount gap widened while stating that the trust was the only binary bet as it held the flagship cryptocurrency physically.
GBTC shares supply cannot be destroyed
The supply of GBTC shares cannot be issued or destroyed on a whim based on demand like traditional ETFs. In this context, the Grayscale Investment LLC applied to the US Securities & Exchange Commission (SEC) to consider GBTC as perhaps an ETF. The approval could turn the dark red into greens. However the regulators are yet to decide on the GBTC’s case.
GBTC first plummeted in the initial days of Feb 2021 as the outstanding shares skyrocketed.
However the launch of proper BTC ETFs in Canada & the first US derivatives-backed ETF of Bitcoin further plummeted the GBTCs competence in the market. This is when the parent company of GBTC, Digital Currency Group decided to buy back its shares to reverse the reds witnessed in the markets.
Currently, GBTC has stumbled more than ProShares strategy-based ETF, trading under the ticker of BITO. While BTC rallied by 1.6% on Jan 18, both GBTC & BITO fell by 6.4% & 3.3% while GBTC is currently trading at $28.02.
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