According to what has been revealed by CryptoQuant, the premium of the Grayscale Bitcoin Trust (GBTC) on the price of BTC has these days touched the lows since April 2019.
Right now, the premium is around $6.50, while in the past it even rose as high as $40.
This detail leads one to believe that, perhaps as early as tomorrow, Grayscale could kick-start a new phase in bitcoin’s upward race.
In fact, a release of funds from the lock-up usually heralds the beginning of an upward phase in prices, bringing an end to consolidation phases, according to past data analysis.
The phenomenon was explained by Hackernoon, who noted that it is precisely related to the release of GBTC shares that have been subject to lock-up. When they are released, the price of bitcoin tends to rise more because customers invest their profits in BTC, while the period leading up to such events is often characterized by lateralization.
On December 25th, 2020 Hackernoon wrote:
“The next major unlocking is set to happen around February 3, 2021. Meaning the time period from December 29th to the next unlocking will be void of unlockings. This voids enables premiums to shrink again just like the nine times before. And it’ll keep shrinking until the next unlocking.
Because of this I expect price to either consolidate or sag”.
The next unlock with release of new shares is scheduled for tomorrow, Wednesday, February 3rd, 2021.
In addition, Grayscale is continuing to buy cryptocurrencies. This week it reopened its Ethereum Trust, with ETH purchases that had been suspended on December 10th, and is adding new trusts.
After Polkadot (DOT), Aave (AAVE), Chainlink (LINK) and Tezos (XTZ), it also added Monero (XMR), Cardano (ADA), Cosmos (ATOM) and EOS.IO (EOS), though Grayscale CEO Michael Sonnenshein clarified that these new trusts do not necessarily mean the company will offer these products.
$20 billion in the Grayscale Bitcoin Trust
Grayscale Investments is now the largest digital asset management company in the world, with over $24 billion under management through its diverse product line. The most popular product remains the Grayscale Bitcoin Trust (GBTC) with over $20 billion, while the Ethereum Trust is currently sitting at $4 billion.
These trusts keep cryptocurrencies illiquid, as they are stored offline in cold wallets, so the trusts themselves tend to be more expensive than the underlying cryptocurrencies. This generates a premium between the value of the trust shares and the price of the underlying.