Buy Bitcoin with 50% discount at largest BTC trust worldwide – Is it a systematic risk?

  • Cathie Wood, through Ark Investment, has acquired 450,000 GBTC shares since FTX filed bankruptcy protection.
  • Bitcoin price precariously hangs on recent support at $17k as bullish sentiments boil on a possible Christmas rally.

Bitcoin price faces a high capitulation rate as institutional investors struggle to hold on to the volatility and risky digital assets. The rumors of a possible bankruptcy for Grayscale and its related companies are raising fears of extreme volatility on the downside. Moreover, Grayscale’s Bitcoin Trust (GBTC) – a ~$5.6 billion BTC fund – has its shares at a record low compared to the relative Bitcoin price.

From a long-term perspective, Bitcoin investors can purchase risky GBTC shares at a 50 per cent discount. Nonetheless, the prospects of possible systemic loopholes – fueled by the FTX fallout- leading to further crypto companies’ implosion make GBTC investments extremely difficult for hodlers. Bradley Duke, co-CEO at ETC Group, said:

“The fact that Grayscale’s Bitcoin Trust is now trading at nearly 50% discount is just awful for holders of GBTC. It really highlights the vast differences in structure quality between different investment vehicles,” 

As Grayscale’s GBTC trends worse since its inception, some Bitcoin enthusiasts, including Cathie Wood and her Ark Investment, have been stashing. Reportedly, Cathie Wood, through Ark Investment, has acquired 450,000 GBTC shares since FTX filed bankruptcy protection.

Meanwhile, Bitcoin price precariously hangs on recent support found at $17k, as bullish sentiments boil on a possible Christmas rally. Furthermore, Bitcoin price has historically gained value in the past fourth quarters and subsequent months.

Bitcoin Market Outlook 

The Bitcoin market has, however, grown more resilient following the FTX implosion despite the shrinking of the underlying value. For instance, El Salvador – a long-term Bitcoin holder – recently announced that it purchases 1 BTC daily. Additionally, regulators worldwide are getting to understand the differences between Bitcoin networks and blockchain companies. The Bitcoin network has not been compromised despite related blockchain companies reporting failures.

As such, the Bitcoin market is expected to be joined by some altcoins in future growth prospects in a similar version as the FANG stocks post dot com era in the early 2000s. 

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According to on-chain data provided by Tokenview, the Bitcoin network enjoys about 51 million holders via unique addresses. This comes as Bitcoin’s hashrate rises to record highs of about 287.5 (EH/s) and a mining difficulty of approximately 34.24 trillion.

As the Bitcoin price faces a possible decline before forming a solid bottom for the 2022 bear market, global geopolitics is expected to play centre stage in future volatility. Furthermore, worldwide military superpowers reportedly use Bitcoin and the cryptocurrency market to navigate through cross-border barriers.

Meanwhile, some market strategists fear the cryptocurrency bear market will sustain far worse than the internet boom in the 1990s. For instance, famous Bitcoin critic Peter Schiff thinks BTC is headed below $5000 in the near future.

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About Author

John Kiguru is an accomplished editor with a strong affinity for all things blockchain and crypto. Leveraging his editorial expertise, he brings clarity and coherence to complex topics in the decentralized technology sphere. With a meticulous approach, John refines and enhances content, ensuring that every piece resonates with the audience.

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