Grayscale Bitcoin Trust Is Pricing Bitcoin at a 30% Premium

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The Grayscale Bitcoin Trust (GBTC) exploded today parallel to Bitcoin’s own rally. However, GBTC is now trading at a premium of over 30 percent of Bitcoin’s real price, showing just how strong the FOMO has become.

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Greyscale Bitcoin Trust (GBTC) is an investment vehicle for those who want to put their money towards Bitcoin (BTC) in tax-advantaged accounts.

GBTC shares can, therefore, be held in certain IRAs, Roth IRAs, and other investor accounts. Publically quoted, the shares are listed as GBTC. Investors are able to buy or sell these shares for a piece of ownership of the Bitcoin Trust.

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Grayscale Premium

GBTC rose sharply on Monday together with Bitcoin’s own price rally, and continued to surpass the value of BTC listed on most cryptocurrency exchanges. At the time of writing, it currently boasts a premium of 30 percent on Bitcoin’s price. Analyst Joseph Todaro pointed out this fact in a recent tweet.

The reason for the premium is twofold. First, there’s an understandable fear of missing out (FOMO). At the same time, GBTC generally prices Bitcoin higher due to its premium tax. This premium, however, is much higher than is normally expected from GBTC. This is a positive indicator for Bitcoin, showing that there’s been a significant uptick in interest from buyers.

Positive Indicator

GBTC is one of the oldest Bitcoin-related funds, having started in 2013. Therefore, it’s generally seen as an indicator of price movements and hype among institutional investors.

For example, Grayscale Investments recently reported that the majority of its investments in Q1 2019 were actually in GBTC. It’s a popular investment vehicle in the cryptocurrency world.

It’s not just GBTC, either. CME Bitcoin futures trading also hit its all-time-high in volume on Monday, another indicator that the rally probably won’t be losing steam anytime soon. Across the entire market, Bitcoin trading volume has been at all-time-high for two days in a row.

It remains to be seen whether GBTC’s premium will subside in the short-term, but it should be interesting to keep an eye on it since it could become a very important BTC price indicator in the weeks to come.

Do you think Bitcoin’s rally can sustain itself? Is it being led by institutional interest or retail investors? Let us know your thoughts in the comments below. 

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Raised in the U.S, Lucian graduated with a BA in economic history. An accomplished freelance journalist, he specializes in writing about the cryptocurrency space and the digital '4th industrial revolution' we find ourselves in.

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