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Grayscale BTC Trust trades at a record 36.7% discount, but is it justified?

Grayscale BTC Trust trades at a record 36.7% discount, but is it justified?


U.S. investors have been waiting for a Bitcoin exchange-traded fund (ETF) approval since May 2014 when the Winklevoss Bitcoin Trust filed an amendment request at the Securities and Exchange (SEC). 

Over the years, the SEC has rejected every applicant and the latest denial was issued to WisdomTree’s application for a spot Bitcoin ETF on Oct. 11. The SEC concluded that the offer did not have the ability “to obtain information necessary to detect, investigate, and deter fraud and market manipulation, as well as violations of exchange rules and applicable federal securities laws and rules.”

Bitcoin investment trust vehicles have existed since 2013, but they have been restricted to accredited investors. Launching a spot-based BTC ETF would open the market to retail investors and a broader array of mutual funds in the industry.

At the moment, U.S. regulators are reluctant to release what many believe would be a more fair and transparent product for Bitcoin. A conflicting reality is, while BTC spot ETFs continue to be rejected, the exact same product has long been available for bonds, global currencies, gold, Chinese equities, real estate, oil and silver.

The Grayscale Bitcoin Trust Fund (GBTC), a U$ 12.3 billion investment fund, is currently trading at a record-high 36.7% discount versus its Bitcoin holdings, but this might not be a buy the dip-type of discount. The gap started after the Toronto Stock Exchange launched the Purpose Bitcoin ETF in February 2021, which is a spot investment product.

What is an exchange-traded fund?

An ETF is a security type that holds diversified underlying investments, including commodities, stocks or bonds. The ETF might resemble a mutual fund because it is pooled and managed by its issuer.

SPY, the ETF that tracks the S&P 500 index, is the most recognizable example of the instrument. The mutual fund is currently managed by State Street and carries $328 billion in assets under management.

More exotic structures are also available, like the ProShares UltraShort Bloomberg Crude Oil (SCO). This fund uses derivatives and aims to offer two times the daily short leverage on oil prices, meaning investors are effectively betting on a downturn in oil prices.

Buying an ETF gives the investor direct ownership of its contents, creating different taxation events versus holding futures contracts and leveraged positions.

Trust funds, like GBTC do not offer redemption or conversion rights

Investment trust funds sit outside the SEC’s authority…

Click Here to Read the Full Original Article at Cointelegraph.com News…