Grayscale Bitcoin Trust to Convert to an ETF, Premium Remains Negative: What’s Next?

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Earlier this Monday, Grayscale Investments announced its plans to transform Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund. Up until recently, GBTC was one of the only investment funds for institutions and retail investors alike. Amidst growing competition, however, the fund’s high management fees and stringent lock-up periods lost favor with many investors. Since February, GBTC had continued to trade at a negative premium — meaning that the fund was trading below the price of Bitcoin. In late 2020, GBTC premium shot up to as high as 50% thanks to a surge in institutional demand for Bitcoin. The premium sunk to an all-time low of -14.34% earlier last month. This significant decline was likely the wake-up call Grayscale needed to turn its increasingly outdated investment product around. In a blog post, the investment firm stated that it was “100% committed” to converting its Bitcoin fund into an ETF. “Today, we…

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