Fall from crypto exchange FTX implosion continues as data shows GBTC discount rate for bitcoin hits record high.
The world’s largest bitcoin mutual fund, Grayscale Bitcoin Trust (GBTC), reach the highest discount level of almost 50% relative to the price of bitcoin (BTC) there.
GBTC is a way for investors to gain exposure for bitcoin over traditional investment vehicles. GBTC is trading at a discount rate of 47.3%, according to data from crypto index provider TradeBlock.
“The fact that Grayscale’s Bitcoin Trust is currently trading at a discount of almost 50% is just bad for GBTC holders. It really highlights the very different in the quality of the structure between different investment vehicles,” Bradley Duke, co-CEO at ETC Group, said in a note to CoinDesk.
The bearish sentiment surrounding that belief deepened over the past few weeks due to fears that crypto trading company Genesis Global Trading, owned by Grayscale’s parent company, Digital Currency Group (DCG), may file for bankruptcy. DCG is also CoinDesk’s parent company.
After the collapse of the crypto exchange FTX, Genesis Global Trading announced on November 16 that it will stop withdrawing customers from its lending unit, Genesis Global Capital. Amid speculation about a possible filing, Genesis said in a note to clients on Wednesday that the resolution of the withdrawal freeze on its loan units would be a matter of “weeks” rather than days.
GBTC shares have not yet traded at a premium to bitcoin from March 2021. Before that date, the trust benefited from strong institutional demand and traded at a double premium to net asset value.
Bitcoin (BTC): The biggest cryptocurrency by a market capitalization of around $17,200, up 2.2% in the past 24 hours. BTC hovered below the $17,000 mark earlier in the day but then bounced around 1:20 pm ET to trade as high as $17,293. Equity markets were also in the green, with the S&P 500 index closing up 0.75%.
ether (ETH): The second largest cryptocurrency by market value is also in the green, recently jumping 3.8%. The rally came after Ethereum the developer determines the next network hard fork, called “Shanghai,” will have a target release time frame of March 2023. This upgrade will include a code known as EIP 4895 that will allow Beacon Chain staked ETH withdrawal. Ether is down 17% last month, breaking the uptrend line connect June and October less.
waves (THE WAVE): The original token of the Waves blockchain traded down 8.8% to $2.10 after South Korea-based exchange Upbit warned users against investing in WAVES. WAVES is a digital asset used as collateral for USDN, a stablecoin whose value is algorithmically driven to 1 USD. Currently, the USDN value is not properly linked to $1 dollar, according to Upbit.
BTC/ETH price per CoinDesk Index; gold is the COMEX spot price. Prices are around 4pm ET
Crypto Market Analysis: How Do Institutional Investors Believe About Bitcoin? COT reports can provide clues
By Glenn Williams Jr.
Rolling three months, the annual basis for BTC remains below zero, reducing the incentive for traders to place neutral trades.
When the basis is positive, traders tend to buy bitcoins in the spot market and sell BTC in the futures market, exposing the difference in results. The same is true for ether (ETH), whose three-month base has been below zero since Nov 12. Bitcoin’s chart highlights the new price inelasticity. Since December 1, prices have moved a total of .001%.
Ultimately, this market favors long-term investors and significant comfort in the value of BTC. Friday’s Commitment of Traders (COT) report will provide insight into the changing institutional comfort level.
Bitcoin 12/8/22 (TradingView)