Grayscale (GBTC) Soars, Leaves Nvidia In The Dust

It’s a wonderful time of the year for early GBTC investors, especially those who took a risk and snapped up these shares in January 2023. Those early months were marred by uncertainty, primarily due to the fallout from the FTX ecosystem collapse, which cast a shadow over the prospects of crypto investments.

According to data from the crypto charting platform TradingView, GBTC shares have not only weathered the storm but have also surpassed Nvidia Corp (NVDA), a well-known top performer among S&P 500 stocks. NVDA achieved a remarkable 198% growth during the year, while GBTC shares surged by an even more impressive 220%, reaching a price of $26.79.

In comparison, Bitcoin (BTC) doubled in value, reaching $35,000, while traditional fixed-income instruments like government bonds faced a sharp decline.

The Driving Force: Bitcoin ETF

The driving force behind GBTC’s remarkable outperformance lies in its proposition for an open-ended Bitcoin exchange-traded fund (ETF). Despite pending approval from the SEC, this potential investment vehicle has garnered substantial interest from investors who firmly believe it is just a matter of time before it receives the green light. As a result, many have heavily invested in GBTC shares. Ultimately, it is the soaring demand for Bitcoin that fuels the interest in GBTC shares.

The demand for the ETF has also propelled the price of Bitcoin, which witnessed a remarkable 28% increase in less than two weeks. At above $35,000, the crypto also hit a 17-month high.

This surge has been primarily driven by spot-ETF rumors, including the anticipation of BlackRock’s spot bitcoin ETF ticker, IBTC, being listed on the clearing house DTCC’s website.

Narrowing Discount Gap

One key indicator of this optimism is the significant reduction in the discount of GBTC shares relative to the trust’s net-asset value (NAV). What was once a 46% discount has now shrunk to just 13%.

Traders have responded by buying GBTC shares while simultaneously hedging downside risks through selling bitcoin in the spot/futures market. The expectation is that once the conversion to

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Author: Amara Khatri

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