Grayscale Investments has temporarily halted accepting deposits into the Bitcoin Trust, on the page of asset manager’s products.
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“The Grayscale Bitcoin Trust [GBTC] private placement is offered on a periodic basis throughout the year and is currently closed,” the statement said.
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Data: Grayscale Investments.
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Due to strong demand from retail investors, GBTC traded above its net asset value (NAV) throughout its history.
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Institutional clients can buy the fund’s shares directly from Grayscale at par, or contribute bitcoins to issue GBTC. The premium of the shares over NAV created an arbitrage opportunity for such investors. After the six-month lockup ended, they could sell GBTC to OTC market participants for a profit.
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That strategy worked, as GBTC’s premium over NAV ranged from 5% to 40%. The situation changed two weeks ago when a discount formed, which, at the time of writing, had not been eliminated and stood at 3.22%.
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Dynamics of GBTC premium/discount to NAV. Data: yCharts.
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According to the latest SEC filing, more than 5% of GBTC shares were held by the crypto lending platform BlockFi and the crypto fund Three Arrows Capital.
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Arcane Research analysts suggested that the discount formation could have been driven by active selling of GBTC by one of those participants who were exploiting the arbitrage opportunities. In February, the six-month lockup for the issued six months earlier 36,000 BTC worth $2 billion at the time expired.
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Another reason, Arcane Research noted, was the launch of similar products by Grayscale’s competitors.
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Earlier, bitcoin funds launched BlockFi and SkyBridge Capital. In early 2021, similar plans were also announced by Pantera Capital.
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In Canada, during February, the local regulator approved two applications to launch bitcoin ETFs—from Purpose Investments and from Evolve Funds Group. In the first two days, the first of them attracted $421 million. The asset manager charges a 1% fee versus 2% at Grayscale, without imposing a lockup. The instrument is directly available to retail investors at par.
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As of March 10, assets under management by Grayscale Investments stood at $43.3 billion.
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03/10/21 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
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Total AUM: $43.3 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $ZEC pic.twitter.com/68xbZw1i0B
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— Grayscale (@Grayscale) March 10, 2021
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As a reminder, Digital Currency Group, Barry Silbert’s parent company and Grayscale’s parent, announced its readiness to buy GBTC shares worth up to $250 million.
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