Why is GBTC trading at a discount?

GBTC has traded at a discount to its bitcoin holdings since February 2021. The situation dramatically worsened last year in the aftermath of FTX blowing up. In November, the lending arm of Genesis halted customer withdrawals, and the GBTC discount increased to 43%.

How much is GBTC worth?

As of writing, the trust holds BTC 635,240, worth over $12 billion. That's roughly 3.3% of bitcoin's circulating supply. Accredited investors can buy GBTC shares directly at the NAV by depositing bitcoin or U.S. dollars. The firm takes care of the custody and charges an annual management fee of 2% to investors.

How does GBTC work?

How it works: That's because GBTC is not an ETF (it wants to be). And its trust structure makes them inflexible to ever-changing supply and demand. So when GBTC was only bitcoin game in town, market demand outstripped supply, shares of GBTC was trading at a premium or for more than the underlying bitcoin it represents.

What happened to GBTC shares?

The discount in GBTC shares relative to the underlying cryptocurrency held in the fund widened to a record 36.2% on Sept. 30, according to data tracked by Delphi Digital. GBTC shares slipped into the discount category in February last year and have traded lower than the fund's net asset value (NAV) ever since.