Grayscale Bitcoin Trust Hits 20% Discount as Firm Files for ETF Conversion

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The Grayscale Bitcoin Trust (GBTC) is facing a 20% discount on the underlying asset. The firm is now hoping to pivot to a Bitcoin ETF. While Grayscale Bitcoin Trust has some similarities with a Bitcoin ETF, giving investors exposure to Bitcoin without the need to physically buy or hold the asset, the two have some differences.

GBTC enables investors to trade shares in trusts holding large pools of Bitcoin, while a Bitcoin ETF offers an opportunity to invest in a fund that directly tracks the price of the underlying asset.

Another important difference is that GBTC shares are created by Grayscale, the operator of the trust, and can be redeemed only after a set period of time. A Bitcoin ETF, however, allows for the creation and redemption of the shares at will, meaning that a premium or discount is normally unlikely if there’s enough liquidity.

Some notable investors in GBTC include Morgan Stanley, which is one of the largest investment banks in the U.S., value fund manager Bill Miller, and Cathie Wood’s investment house ARK Invest.more