The exposure price via one of the biggest trusts on the market has dropped to a yet unseen low. The unimaginable 50% discount to NAV is a new record we have never before witnessed.
According to Ycharts, the discount to NAV reached 48% at some point two days ago, making Grayscale the cheapest way of exposing yourself to Bitcoin and some other assets. Such a strong devaluation of a fund's shares might be considered an investment opportunity for those who are willing to make a long-term investment in BTC, but there are some serious downsides.
Such a large discount would not be possible without some serious risk concerns, as investors tend to use arbitrage opportunities on the market moments after they occur. Unfortunately, Glassnode's case is not the best arbitrage opportunity out there, as inflows to the funds are not recovering.
The reluctance of investors to gain exposure via Glassnode is understandable as the fund's terms require investors to hold their shares for a certain period of time after the purchase. This creates unnecessary risks, which are the last thing you would need on a volatile cryptocurrency market.
The discount to net asset value is not unusual for trusts like Grayscale; however, it usually stays below 10%, and even abnormal volatility on the market should not push it to the extent we are seeing on GBTC right now.
To battle current market conditions, Grayscale has been actively trying to convert its Bitcoin trust to an ETF and, as expected, failed to do so, as the financial regulator confirmed that the company's desire to transform would not be possible.
At press time, Grayscale's discount sits at 46.37%, while Bitcoin is trading at $16,837.