Discount on bitcoin? This is only possible through Grayscale’s bitcoin fund. This fund is the flagship of Digital Currency Group, and this week you could buy shares at a discount of 16.52% compared to the bitcoin price. That discount has now fallen to 11.53%
Source: ycharts.com
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How does Grayscale discount work?
The Grayscale Bitcoin Trust offers currently exposure to 0.000938223 BTC per share, an amount that traded for approximately $42.38 at market close on Thursday, August 19. However, through shares of GBTC, that same amount of Bitcoin traded at $37.49, meaning a negative spread of 11.53%. In other words, if you bought bitcoin indirectly at Grayscale instead of on the exchanges, you paid 11.53% less against the bitcoin price from last Thursday.
Mandatory HODL
Once you have shares of Grayscale’s Bitcoin fund, you can’t just get rid of them. GBTC is not as liquid as normal bitcoins. Due to the six-month lock-up of initial GBTC investments, GBTC holders will not be able to react and profit from rising or falling prices. Well, they can of course buy new shares. Thus, the product tends to trade at a premium or a discount compared to the Bitcoin held in it.
Shorten on premium
You are actually playing a completely different game, if you also have to take into account discounts and premiums on Grayscale’s bitcoins. For a long time it was popular to open a short when the stock reached a certain premium. This was a relatively risk-free strategy as GBTC traded at a premium.
But now that a discount is offered, or a negative premium, there is really no financial incentive to sell GBTC shares.
Who is this interesting for?
Right now, discounted GBTC stocks are an elegant solution and vehicle for traditional investors, or those looking to gain exposure to the bitcoin price through their retirement portfolio. For very busy people, investors who have their fingers in 100 pots, large funds and also ordinary people, the learning curve can be too high. After all, you have to learn how and where to buy bitcoin, how to send it and you have to arrange the security yourself (or you download BLOX, just as easy).
In such cases, GBTC can come to the rescue, you throw money at it and you just wait. Not that you have a choice, you are forced to wait six months before you can redeem these shares.
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