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GBTC Bitcoin Premium is at 24%, Shows Gradual Increase in Institutional Demand

Opinions
Sat, 12/14/2019 - 18:00
Joseph Young
Bitcoin Investment Trust (GBTC) is still showing a high premium despite stagnancy in the bitcoin price.
Cover image via 123rf.com

The Bitcoin Investment Trust (GBTC), an investment vehicle operated by Grayscale that lets accredited and institutional investors trade bitcoin, is still showing a high premium at 24%.

Each share of GBTC represents about one thousandth of one bitcoin or 0.00097033 BTC. Since GBTC is currently priced at $8.79, that values bitcoin at $8,966. On major spot and margin trading platforms, the bitcoin price is hovering at $7,500.

Why Bitcoin Investment Trust premium shows institutional demand

Due to various restrictions, most accredited and institutional investors are unable to invest in bitcoin and other major cryptocurrencies through crypto exchanges. They require strictly regulated platforms that are overseen by financial regulators.

Investors pay a premium to purchase bitcoin through the Bitcoin Investment Trust because the GBTC offers certain safeguards and eliminates regulatory risks which most existing crypto exchanges do not have.

Also, some investors are required to invest through the stock market or over-the-counter (OTC) securities platforms, creating a strong market for GBTC.

According to Grayscale, net assets under management of the company, which mainly comes from the Bitcoin Investment Trust, has risen back to $2 billion.

About the author

Joseph Young is an analyst based in South Korea that has been covering finance, fintech, and cryptocurrency since 2013. He has worked with various recognized publications in both the finance and cryptocurrency industries.

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