The world’s largest Bitcoin fund – Grayscale Bitcoin Trust (GBTC) – has suffered a blow amid the volatile crypto market. Grayscale Bitcoin Trust (GBTC) has been trading at a steep discount of 17% annually so far.
As of now, GBTC has $27 billion in assets under management. This is a staggering 30% discount from Bitcoin’s all-time high in November 2021. Furthermore, the recent Bitcoin (BTC) sell-off had a more pronounced effect on GBTC share price (OTCTMKTS: GBTC).
GBTC stock price is trading at a record discount to the underlying Bitcoin. Also, the stock is down 19% so far in 2022. GBTC stock price has corrected a staggering 50% over the past three months. In a report accessed by Bloomberg, Brent Donnelly, president of Spectra Markets said:
“GBTC continues to make hearts break as the downside widens. GBTC is essentially a binary bet on a physical ETF at this point. Can be tempting but in a way that traps values. ”
The correlation of GBTC with Bitcoin is dropping to an even greater extent. While Bitcoin (BTC) price increased 1.6% on Tuesday, January 18, GBTC gained 6.4% on the same day.
Convert GBTC to Spot Bitcoin ETF
Last year, in October 2021, Grayscale Investment LLC filed an application with the United States Securities and Exchange Commission (SEC) to convert GBTC into a spot Bitcoin ETF. This move will likely help Grayscale secure more cash flow from institutions.
However, the SEC is unlikely to approve a spot Bitcoin ETF citing investor protection concerns. On Wednesday, January 19, SEC Chairman Gary Gensler said that crypto exchanges will be the top focus of the crackdown on the securities regulator. Speaking during a virtual conference, Gensler said:
“I have asked staff to consider ways to include these platforms within the investor protection funds. If trading platforms fail to enter the regulated space, it will be another year of public vulnerability. “