HomeCryptoBitcoinThe discount on the Grayscale Bitcoin Trust at its lowest just before...

The discount on the Grayscale Bitcoin Trust at its lowest just before the approval of the ETF

Grayscale, one step away from converting its GBTC fund into a Bitcoin spot ETF, recorded a drop in the discount of the Grayscale Bitcoin Trust fund on Monday, reaching the level of 18 months ago. 

Grayscale Bitcoin ETF: GBTC discount reaches 5.6%

According to reports, it seems that the discount of the Grayscale Bitcoin Trust (GBTC), the world’s largest Bitcoin (BTC) fund, has dropped to 5.6% on Monday, reaching the lowest level seen 18 months ago.

This happens just when the digital currency asset management company, a subsidiary of the Digital Currency Group, is in turmoil over the conversion of its GBTC into a Bitcoin spot ETF. 

It is worth noting that this discount drop of up to 5.6% on Monday is far from the peak of nearly 50% in December 2022. 

This suggests that this constant reduction in the discount of GBTC is due to expectations of approval of its exchange-traded fund (or ETF) and the increase in Bitcoin sentiment.

Not by chance, precisely on Monday, GBTC closed at $39, while each GBTC share held $41.86 in Bitcoin starting from Tuesday.

Grayscale Bitcoin ETF and the reduction of GBTC discount: what does it mean?

In general, the Grayscale Bitcoin Trust is one of the first securities invested exclusively and passively in Bitcoin (BTC), which allows investors to gain exposure to BTC in the form of a security, without having to directly purchase, hold, and store the crypto. 

The objective of the investment is to ensure that the value of each GBTC share reflects the price performance of BTC, net of fees and expenses. On the other hand, Grayscale purchases BTC and holds them in the dedicated fund, the Grayscale Bitcoin Trust. 

At this point, the GBTC is said to be at a discount when its price to NAV (Net Asset Value, the net asset value) is negative compared to the current price of BTC. Conversely, it is at a premium when the price to NAV is positive. 

In general, GBTC has consistently traded at a rather large discount compared to the spot price of the BTC it holds, averaging around 40%.

This drop in discount to a minimum of 5.6% on Monday could also be considered as a bearish indicator, as it could signal a decrease in interest for BTC from traders. 

Not only that, Grayscale is still awaiting an official decision on the listing of the trust as an ETF, from the United States Securities and Exchange Commission (or SEC). 

Adjusting fees to make your Bitcoin spot ETF more competitive

Despite this official confirmation from the SEC of the USA has not yet arrived, Grayscale has decided to revise its strategy to make its Bitcoin spot ETF more competitive. And in fact, Grayscale has lowered its management fee from 2% to 1.5%.

This revision of your S3 deposit with the reduction of the management fee is aimed at improving the appeal of your ETF offer.

The CEO of Grayscale, Michael Sonnenshein, reportedly emphasized that the decision came after extensive research and evaluation of the fees associated with similar product offerings. 

At the same time, Sonnenshein did not want to comment on the decision of the competitor BlackRock which, instead, would have revealed that the initial fee for its Bitcoin spot ETF will be 0.30%.

Stefania Stimolo
Stefania Stimolo
Graduated in Marketing and Communication, Stefania is an explorer of innovative opportunities. She started out as a Sales Assistant for e-commerce, and in 2016 she began to develop a passion for the digital world, initially in the Network Marketing sector, where she discovered and became passionate about the ideals behind Bitcoin and Blockchain technology, which lead her to work as a copywriter and translator for ICO projects and blogs, and organize introductory courses.