Grayscale’s GBTC fund attracted attention with the relatively large large gap between its share price and Bitcoin (BTC) spot prices. The closing of the gap may become a signal for future BTC developments, as currently the share price converges with BTC positions.
GBTC Gap Remains Dynamic, May Move Within Hours
At the moment, there is still a small gap, which suggests GBTC buyers are not willing to pay more for the shares. Timothy Peterson, Bitcoin analyst, believes the gap has a historical record of closing in, thus the current situation suggests a price move on either side.
This gap in $GBTC vs. $BTC must close. Either $GBTC up or #bitcoin down
GBTC shares traded at $10.06 on Tuesday, achieving a premium very fast, with a 12% growth in the past day. Price positions can potentially shift within hours, as Grayscale data showed a price for holdings per share at $8.53. In a tweet Grayscale reported,
01/17/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products. Total AUM: $2.6 billion
The gap may also be closed if BTC prices drop. In this case, BTC has stagnated around $8,657.51, as trading activity is gradually unwinding from a recent peak. At this point, bitcoin is once again capable of choosing direction, or gradually unraveling.
Usually, the GBTC gap will close and turn into a premium in cases of a bull market. The biggest premium was seen in June 2019, with interest dwindling afterward. But Grayscale also sees significant growth of investment interests, boosted by the positive bitcoin profile in 2019.
Past Year was Most Successful So Far for Grayscale’s Products
Despite the risks, Grayscale showed 2019 was its strongest year yet, with growth in funds invested. In 2019, Grayscale also unlocked its funds for retail investors, in addition to institutional buyers.
Our 2019 Grayscale Digital Asset Investment Report highlights investment activity and performance across the Grayscale family of products this past year. Spoiler alert: it was a record-breaking year!
The past year also differentiated interest in BTC investments, with altcoins lagging. Grayscale saw significantly slower performance and almost no new funds raised for its altcoin funds. Most investors choose a single product, though there is still a share of buyers that differentiate with altcoin-based products.
Grayscale client fun fact: 36% of our clients now have allocations to multiple products within our investment suite. More trends and insights on digital currency investors can be found in our 2019 Digital Asset Investment Report: https://gryscl.co/3adDf4X
Grayscale also looked back on its chief clients, remarking that at this point, 71% of funds invested belonged to institutions.
Institutional adoption has been a consistent pattern that only gained momentum in 2019 – institutional capital accounted for 71% of assets raised into our product family.
The recent price rally means Grayscale now carries $2.6 billion in assets under management, almost touching the peak levels of 2019. In January, BTC is now preparing for alternative scenarios, possibly going through lows before rallying again.
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