The premium-to-NAV of Barry Silbert's Grayscale Bitcoin Trust (OTCQX:GBTC) fell from 40% to 4% during bitcoin's recent price correction. The arbitrage available between bitcoin's price and GBTC's net asset value (NAV) to institutional investors has been one of the most important drivers of demand for bitcoin, a phenomenon we have covered for months here at Inside Cryptocurrency.
Slimmer arbitrage profits (for now):
- GBTC holds roughly 3% of all circulating bitcoin.
- With arbitrageurs able to earn higher risk-adjusted yields elsewhere, buying from GBTC investors could decelerate.
- The trust's large markup to its underlying holdings — 40% as of Dec. 21 — is now just 4%.
- GBTC's premium to its underlying holdings dropped as low as 2.8% this month — its lowest premium since March 2017, according to Bloomberg data.