Grayscale Bitcoin Trust’s Discount Rate Drops Below 10% for the First Time in Over 2 Years!

• The discount rate of Grayscale Bitcoin Trust (GBTC) based on net asset value (NAV) has dropped below 10% for the first time in over two years.
• Shares of GBTC are currently trading at a discount since they cannot be redeemed, meaning the only option for shareholders is to sell them to other potential buyers.
• Ark Invest also sold 32,980 GBTC (worth $1 million) from the same fund on November 21, indicating that they have sold over $2 million worth of shares in the last two days at current prices.

Grayscale Bitcoin Trust (GBTC), discount rate calculated on NAV dropped below 10 percent: What does this discount mean?

Grayscale Bitcoin Trust’s Discount Rate Declines

The discount rate of Grayscale Bitcoin Trust (GBTC) based on net asset value (NAV) has dropped below 10% for the first time in over two years. The discount rate, which shows how much lower the market price of each share is compared to the value of the Bitcoin it represents, dropped to -9.77% at the close of the market yesterday, the lowest level since July 2021.

Shares of GBTC are currently trading at a discount since they cannot be redeemed, meaning the only option for shareholders is to sell them to other potential buyers. However, it historically traded at a premium until a crypto credit crunch in 2021.

Back then, JPMorgan analysts attributed the price dropping to a discount to a combination of institutional investors selling GBTC at a premium to cash and the launch of new Bitcoin exchange-traded funds (ETFs) in Canada.

As of yesterday’s market close, GBTC shares were trading at $30.45. GBTC increased by about 25% last month following the SEC decision not to appeal the decision regarding Grayscale’s attempt to convert its flagship GBTC fund into a spot Bitcoin ETF.

The contraction trend, which saw the discount drop to over -40% before BlackRock and others applied for spot Bitcoin ETFs in June, is likely a sign of increased optimism that the SEC will approve a spot Bitcoin ETF in the U.S., including the potential conversion of GBTC. The SEC met with Grayscale and BlackRock earlier this week to discuss Bitcoin ETF applications.

Cathie Wood’s Ark Invest Sells Over $2 Million Worth of GBTC in Two Days

Cathie Wood’s Ark Invest made another sale from Grayscale Bitcoin Trust (GBTC), according to the company’s latest trading disclosure. Ark Invest sold 36,168 GBTC shares (worth $1.1 million) from the ARK Next Generation Internet fund (ARKW). Ark Invest also sold 32,980 GBTC shares (worth $1 million) from the same fund on November 21, indicating that they have sold over $2 million worth of shares in the last two days at current prices.

Earlier this month, the investment manager moved by selling 139,506 GBTC shares (worth $3.8 million) from ARKW and buying 113,326 shares of Block, Inc. (worth $5.6 million) in three of its funds, following a 22% increase in reported third-quarter bitcoin gains from Cash App. Bitcoin is currently trading at $37,350.