Is Grayscale Bitcoin Trust’s Demise Inevitable? GBTC Premium Negative for a Consecutive Month

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Since February, Grayscale Bitcoin Trust (GBTC) has continued to trade at a negative premium. The Bitcoin fund, available to institutional investors on the traditional stock market, has traded below the price of Bitcoin since February 22, 2021 — a telling sign that its demand was drying up. Just four months ago, GBTC”s premium was at a whopping 33.12%. Since then, its premium has fallen into a downward spiral, hitting an all-time low of -14.34% on March 25 and currently trading at -9.32%. What’s surprising is that, in the exact same time period, Bitcoin’s price has appreciated 57% — from $36,850 to $57,891. So what exactly happened? Analyzing Why Premium Continues to Trade at a Discount Institutional buyers were always the biggest proponent to the fund’s past success. According to GrayScale’s third quarter report in 2020, 80% of investments in the trust were from institutions. Institutions often leverage their investments, taking…

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