GBTC premium hits a new historic low! With continuously increasing market supply, how will Grayscale break through the dilemma?

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GBTC Negative Premium Widens Again

Despite Tesla officially enabling Bitcoin payment functionality yesterday, triggering a strong rebound, Bitcoin's weak trend persisted. On the other hand, the discount situation of the Bitcoin trust investment product GBTC is becoming more severe. According to data from the platform bybt, GBTC's negative premium rate hit a historic low of -14.34%, indicating that the trading market supply of GBTC far exceeds demand.

Grayscale Bitcoin Holdings Experience Net Outflow

On the other hand, many institutional investors purchased GBTC from Grayscale last year, and this week and in the coming months will see a large-scale unlocking, further increasing the supply of GBTC in the market. This will also suppress Grayscale's motivation to acquire Bitcoin. Additionally, since Grayscale regularly sells Bitcoin to cover its expenses, including a 2% annual fee, the recent stagnation in Grayscale's Bitcoin holdings due to halted acquisitions has caused panic among many investors.

Recently, Grayscale's parent company DCG announced that it would invest up to $250 million of its cash reserves into the Grayscale Bitcoin fund GBTC, aiming to alleviate the negative premium situation of GBTC. However, the situation has not improved, and more and more people are starting to worry about how Grayscale will solve this thorny issue.

GBTC to Convert to Bitcoin ETF

In response, Nic Carter, the founder of Coinmetrics, stated that Grayscale may convert the nature of the GBTC product into a redeemable Bitcoin ETF investment product.

my guess (with the same info as anyone else) – GBTC is rolled into an ETF and the premium or discount goes to 0.

— nic carter (@nic__carter) March 24, 2021

With major investment banks like Fidelity expressing interest in Bitcoin ETFs, there is indeed a high possibility that Grayscale will adjust its product positioning to solve the premium issue and transition GBTC from institutional investors to a broader investment market.