The largest bitcoin investment vehicle, the Grayscale Bitcoin Trust (GBTC), is now trading at its biggest discount ever in the spot market.
Data from on-chain analytics resource Coinglass shows that GBTC shares are down 34% against BTC/USD on major exchanges as of June 17.
GBTC suffers from market downturn
Amid the continued turmoil in DeFi spilling over to infect the crypto market, conditions have deteriorated for investors big and small.
The latest figures now show that institutions have definitely failed to avoid contagion, and the already underperforming GBTC has hit new lows.
The GBTC premium, long misnamed due to the fund’s shares actually costing less than Bitcoin itself, is hovering around its lowest values in history. On June 17, these were trading at 34.2% cheaper than the spot price of Bitcoin (also known as the net asset value or NAV).
A sharp decline accompanied a similar decline in spot markets as BTC/USD retested $20,000 twice.
As Grayscale sues U.S. regulators for approval to convert GBTC into an exchange-traded fund (ETF) at the spot price of Bitcoin, conditions continue to look unfavorable for crypto institutional products amid heightened market scrutiny. government following the Terra and Celsius collapses.
While the company remains buoyant on the outlook, GBTC’s performance has not escaped commentators, who are pointing the finger at regulators for what they see as an inaccurate risk assessment.
Bitcoin spot ETFs remain banned in the United States due to investor protection concerns, allowing countries like Canada and Australia to gain first-mover advantage.
Be sure to thank Mr. Gensler for everyone’s protection. pic.twitter.com/Q1cAw8hBtR
— Dylan LeClair (@DylanLeClair_) June 16, 2022
“Without ETF approval, GBTC can go up to -100% premium on NAV”, Vijay Boyapati joked this week.
Hayes Names D-Day for the Crypto Market Bottom
This situation has not been helped by reported liquidity issues in several crypto funds exposed to those already suffering severe losses. Embattled Three Arrows Capital (known as 3AC), for example, is the largest holder of GBTC with over 38.8 million shares.
Related: These 3 Metrics Suggest The Bitcoin Price Crash Isn’t Over
As 3AC fails to meet margin call requirements this week, a stark gap is opening up between GBTC and its competitors. The ProShares Bitcoin Strategy ETF (BITO), the first US-approved ETF based on Bitcoin futures, even added BTC to its assets under management in recent days.
For Arthur Hayes, former boss of derivatives giant BitMEX, some of the biggest names in institutional crypto investing are therefore facing a “River Styx” moment.
In his latest blog post on June 17, Hayes dealt another blow to the plight of beleaguered projects Celsius, Terra and more.
“As this cohort of companies are forced to vomit any assets that aren’t locked into a long-term return strategy, watch below,” he predicted.
“More indiscriminate sales of all liquid assets from their loan books will take place so that these lenders can return the assets to their retail depositors.”
Having previously called a bottom of $1,000 for Ether (ETH) and $25,000 for Bitcoin, Hayes acknowledged that the reality had been much worse.
The upcoming Fourth of July holiday weekend, he added, should provide ideal conditions for a macroeconomic trough, particularly at the end of the second quarter.
“June 30-July 5 is going to be a mad dash to the bottom,” the blog post continues.
“My lower levels of $25,000-$27,000 Bitcoin and $1,700-$1,800 Ether were in tatters. How low can we go? I believe we will find out during this fateful weekend.
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