Global demand for Bitcoin is increasing. That is a fact very few people will deny at this time. However, not all investors sign up for an exchange to buy Bitcoin. Nor will they use leverage trading to predict the price either. Instead, they will flock to solutions such as GBTC. The Bitcoin Investment Trust is a convenient gateway to Bitcoin without buying cryptocurrency. However, its premium prices are getting out of hand lately.
What is Going on With The GBTC Price?
Everyone knows a traditional investment vehicle to Bitcoin will be subject to a premium. Over the past year or so, the GBTC premium has grown over time. However, it seems things are growing exponentially as of right now. Earlier this week, the premium was well over 100% compared to the global Bitcoin price. That is both remarkable and troublesome at the very same time.
To put this into perspective, the GBTC Bitcoin price is not the same as the actual Bitcoin price. Investors pay a premium for convenient access to cryptocurrency without the risk of dealing with third-party exchanges. Moreover, they never need to hold the cryptocurrency themselves either. Ever since Grayscale Investments launched GBTC, the venture has proven to be quite successful. Originally, the goal was to track the Bitcoin price and provide an accurate projection. However, the GBTC NAV depicts the Bitcoin price at twice the value of Bitcoin on the open market.
On the one hand, this would indicate a lot of demand for Bitcoin. It could also lead to a major price increase for the popular cryptocurrency. So far, that has not been the case, though. Instead, the gap compared to the regular Bitcoin price is only widening for no apparent reason. Earlier this week, GBTC users paid a US$2,000 premium to be part of the Bitcoin Investment Trust. That is quite a problematic development. Such false projections can easily backfire on the entire Bitcoin ecosystem and drive prices down.
The bigger question is whether or not this situation will change. For now, it does not appear the GBTC price will come down anytime soon. The price discrepancy has been around for quite some time now. It was never this high in the beginning, but it looks as if investors don’t mind the difference that much. It is an interesting situation to keep an eye on, that much is certain.