GBTC Discount to NAV Drops To 6.3% As Grayscale Loses The Bitcoin ETF Fee War
YEREVAN (CoinChapter.com) – Grayscale Bitcoin Trust GBTC traded at the lowest discount to net asset value (NAV) in over 18 months – 6.3% on Jan 9, in the light of the possible Bitcoin ETF approval by the US Securities and Exchange Commission (SEC).
GBTC and Its Discount to NAV
In detail, the GBTC has been trading at a discount since February 2021, with the gap widening to nearly 50% in December 2022. However, this gap has narrowed due to rising bitcoin sentiment and expectations of an ETF approval.
Grayscale Investments had $29 billion in assets under management (AUM) as of Jan 9, a whopping 85% increase since Q4, 2023. The reserve’s valuation surged in sync with Bitcoin’s 150% price appreciation to $47,000 in the same period.
As mentioned, the Trust displayed a 6.3% discount for GBTC. Grayscale holds $41.8 worth of Bitcoins per share in their treasury. However, stock market traders can buy the same Bitcoin-backed GBTC share for $39, or 6.3% less than the Grayscale holding price per share.
Notably, the discount typically appears in bear markets, i.e., when enough traders sell their GBTC, the stock’s actual value is less than the Bitcoin Grayscale has in its GBTC Trust. As mentioned in the previous GBTC review, Martin Leinweber, a digital asset product strategist at MaretVector Index, commented on the significance of the discount to NAV narrowing year-to-date.
When the discount narrows, it suggests that investors are becoming more confident in the trust or that demand for the shares is increasing. If the discount narrows significantly or disappears completely, it could lead to a substantial return for investors.
the strategist explained.
Meanwhile Grayscale is losing the fee war among the other applicants for a spot Bitcoin ETF.
Grayscale Loses the Fee War Before ETF Launch
As CoinChapter reported earlier, a fee war has erupted among firms vying to launch the first spot Bitcoin ETFs in the United States. The aggressive pricing strategies from industry giants like BlackRock and ARK Invest underscore the high stakes involved in attracting investors to these financial products, which could overshadow Grayscale’s favorable GBTC discount to NAV
Bitwise set the pace with no fee for the first six months and the first $1 billion in assets, followed by a modest 0.24% fee. Not to be outdone, BlackRock unveiled an initial fee of 0.20% for its iShares Bitcoin ETF, which is set to rise to 0.30% once the fund surpasses $5 billion in assets.
ARK Invest, in tandem with 21Shares, followed suit, waiving their fee for the first six months or until reaching $1 billion in assets, after which a fee of 0.25% will be charged. This marked a steep drop from their initially proposed fee of 0.80%, highlighting the intensity of the ongoing price competition.
Grayscale has only reduced its management fee from 2% to 1.5% in anticipation of the conversion of its Bitcoin Trust into an ETF.
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Filed under: Bitcoin - @ January 9, 2024 4:25 pm