“The Grayscale Bitcoin Trust [ GBTC ] private offering is offered on a recurring basis throughout the year and is currently closed ,” the statement said.
Due to strong demand from retail investors, GBTC has traded above its net asset value (NAV) throughout history.
Institutional clients can buy shares of the trust directly from Grayscale at par, or deposit bitcoins for the GBTC issue. The excess of the share price over NAV created an arbitrage opportunity for such investors. After completing the six-month lockup, they could sell GBTC to OTC market participants at a profit.
This strategy was successful as GBTC’s premium over NAV ranged from 5% to 40%. The situation changed two weeks ago, when a discount was formed, which at the time of writing is not liquidated and amounts to 3.22%.
According to the latest reports to the US Securities and Exchange Commission, more than 5% of GBTC shares were held by the BlockFi crypto-lending platform and the Three Arrows Capital crypto fund.
Arcane Research analysts suggested that the formation of the discount could have caused active sales of GBTC by one of those participants who realized the available arbitrage opportunities. In February, the deadline for the mandatory storage of 36,000 BTC issued six months ago, worth $ 2 billion at the moment, expired.
Another reason Arcane Research experts called the launch of similar products by Grayscale’s competitors.
Bitcoin funds have previously launched BlockFi and SkyBridge Capital . At the beginning of 2021, similar plans were also announced at Pantera Capital .
In Canada, the local regulator approved two applications for the launch of Bitcoin ETFs during February – from Purpose Investments and from Evolve Funds Group . In the first two days, the first of them raised $ 421 million . The management company charges a commission of 1% versus 2% from Grayscale, without imposing a lockup requirement. The instrument is directly available to retail investors at par.
As of March 10, Grayscale Investments managed $ 43.3 billion in assets.
03/10/21 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
– Grayscale (@Grayscale) March 10, 2021
Recall that Barry Silbert’s Digital Currency Group, the parent company of Grayscale, announced its readiness to buy GBTC shares for up to $ 250 million .