The Grayscale Bitcoin Fund was one of the main ways to receive exposure to the cryptocurrency market for the majority of institutional investors back in the 2017 bullrun era. However, with the appearance of Bitcoin futures ETPs, the attention of investors shifted and the discount of the fund started rising to unprecedented values.
36% cheaper than spot
According to data shared by Arcane Analytics, it is far cheaper to get exposure to BTC via Grayscale compared to the spot. The discount against the NAV of the GBTC fund reached the record of 36%, making it far more profitable to buy Bitcoin via the fund rather than using the spot asset.
The current discount on GBTC and the lack of inflows into it paint a clear picture: institutional investors do not feel like it is a good time for investing in Bitcoin and the cryptocurrency market in general.
The GBTC discount reached a new record-low of 36% last week, an implied bitcoin price of $12,500.— Arcane Research (@ArcaneResearch) October 5, 2022
The current discount implies that GBTC will remain close-ended until January 2045. pic.twitter.com/gW4DEouZAp
A high discount against NAV might turn out to be a good opportunity for investors when Bitcoin enters the uptrend once again since the discount tends to turn premium when the demand for such exposure is on the rise.
Unfortunately, some investors prefer avoiding GBTC, considering some downsides like the minimum investment value of $50,000, which does not apply to secondary markets, a lock period and a noteworthy management fee.
Generally, institutional inflows to the cryptocurrency market are going through tough times, considering the almost nonexistent volume on Bitcoin and Ethereum ETPs and funds in both the U.S. and Canada.
The crisis on the institutional side of the market will most likely continue until the U.S. pushes a strict monetary policy to battle inflation.