GBTC Stock: Did the Opening of GBTC Affect the Fall of BTC
A significant portion of the locked GBTC stocks are scheduled to be released this month. On July 18, they will re-unlock approximately 16,240 BTC worth over $550 million at current prices, which they locked six months ago.
Once unlocked, investors can sell their shares. If they choose to sell, this could put downward pressure on both GBTC stocks and Bitcoin prices.
Many analysts, including JP Morgan analysts, draw attention to the perception that Bitcoin is not environmentally friendly, stemming from Elon Musk, and China’s pressure on mining. For this and other reasons, he predicts that investors will most likely liquidate their shares due to the changing perception in the cryptocurrency market.
What is GBTC Lock?
Grayscale’s GBTC fund allows both individual and institutional investors to invest in BTC without buying Bitcoin directly. In this way, individual and institutional investors can meet Bitcoin much more easily.
Investors involved in the fund can directly buy shares of the GBTC fund and then sell them after a six-month lock-in on a secondary market under the GBTC code.
The GBTC fund has become very popular among investors, with the price of Bitcoin increasing at an incredible rate recently. Because for institutional investors who want to buy BTC, Grayscale’s GBTC fund is the only option available. Especially in the USA, since the regulators have not yet approved the Bitcoin Exchange Traded Fund (ETF), GBTC is the first choice of institutional investors who want to buy Bitcoin.
Due to the lack of alternatives, GBTC stocks are often traded at a higher price than Bitcoin in the spot markets. However, the buying and selling prices have changed in recent months and GBTC stocks have started trading at a significant discount. This resulted in Grayscale, the biggest buyer of Bitcoin, stopping buying more BTC.
While not yet available in the United States, other countries such as Canada, Brazil, and Dubai already have approval for Bitcoin ETFs. This offers a good alternative to GBTC stocks, especially for institutional investors.
Will Unlocking GBTCs Stocks Have an Impact on Bitcoin?
QCP Capital analysts stated in their report that unlocking GBTC stock will not have much impact on the market. Lock-opening in July may be the biggest one-day lock-opening this year. However, such large-scale unlocks on the Grayscale side have happened before. The QCP report noted that in previous lockdowns, most large institutional investors did not sell at the current discounted price. As a result, QCP analysts think that the upcoming unlocking in GBTC stock will not have a significant impact on market prices.
Grayscale Bitcoin Trust
Grayscale Bitcoin Trust joined the market on September 25, 2013. It is the largest part of the company with assets under management of $ 3,557 million. The next largest company for comparison is the Grayscale Ethereum Trust, which has $395.7 million under management and is 11 times smaller than its Bitcoin equivalent.
Trusts operate in a similar way to physically-backed ETFs, where investors buy and sell publicly traded shares. Regarding the Grayscale Bitcoin trust, all trading takes place under the code GBTC. However, you cannot trade GBTC stock on exchanges, you can only trade through OTCQX, which is an over-the-counter market.
Grayscale investment trusts, and in particular the Grayscale Bitcoin Trust, have gained popularity because they are accessible through traditional brokerage and retirement accounts. This allows exposure to cryptocurrencies with the assurance of a reputable third party. This regulation solves several challenges associated with investing in cryptocurrencies, among them the secure storage of digital assets.
However, these benefits come at a cost. Massari researcher Ryan Watkins said that the value proposition over direct cryptocurrency purchases leaves much to be desired. Watkins also noted that Bitcoin purchases by Grayscale are in real terms much lower than those shown at face value.