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For more than two years, the fund traded at an increasingly widening discount to the value of the bitcoin it holds, but that’s turned around significantly in recent weeks, rewarding investors.“When the discount narrows, it suggests that investors are becoming more confident in the trust or that demand for the shares is increasing.
If the discount narrows significantly or disappears completely, it could lead to a substantial return for investors,” said Martin Leinweber, a digital asset product strategist at MarketVector Index, in an interview with CoinDesk.The structure of the trust matters a lot when answering these questions.
It’s a closed-end fund (CEF), which is a different product than exchange-traded funds (ETFs), which have exploded in popularity in recent years.
Real Estate Crowdfunding for Tax Optimized Investments ✌️【Temporary Job】✌️Achieve up to 100% returns with ₹500. Start investing now for a brighter financial future!Both are effectively vaults that hold a pile of assets, be it stocks or, in the case of the Grayscale trust, billions of dollars worth of bitcoin (BTC).But ETFs have a feature that ensures specialized trading firms known as authorized participants can help keep their value closely in line with the value of the assets they hold.
If an ETF owns $10 billion worth of stocks, but fetches $12 billion in market capitalization, these traders can create new shares of the ETF.
Doing this allows them to make money due to the premium and also drives the ETF’s price down toward the value of the ETF’s holdings; they’re rewarded for making the ETF more efficient.Conversely, if the ETF’s price drops to a discount – say its market cap falters to $8 billion, versus $10 billion in assets – those traders can redeem shares, again making money from the discrepancy and pushing prices and assets back toward parity.Grayscale wants to turn GBTC into an ETF, though the U.S.
Real Estate Crowdfunding for Tax Optimized Investments ✌️【Temporary Job】✌️Your smart investment starts at ₹500. Unlock high returns with minimum risk!Securities and Exchange Commission (SEC) has rejected that.
Grayscale has sued to overturn that decision.
In the meantime, as a CEF, it lacks the arbitrage mechanism ETFs use to keep prices from getting out of whack.GBTC has traded at a discount to its bitcoin holdings since February 2021.
Real Estate Crowdfunding for Tax Optimized Investments ✌️【Temporary Job】✌️Invest small, earn big! ₹500 can earn you consistent monthly profits!The situation dramatically worsened last year in the aftermath of FTX blowing up.
In November, the lending arm ofGenesis halted customer withdrawals, and the GBTC discount increased to 43%.
Real Estate Crowdfunding for Tax Optimized Investments ✌️【Temporary Job】✌️Achieve up to 100% returns with ₹500. Start investing now for a brighter financial future!Both Genesis and Grayscale are owned by Digital Currency Group (which also owns CoinDesk).
Real Estate Crowdfunding for Tax Optimized Investments ✌️【Temporary Job】✌️Start small with ₹500 and enjoy huge returns. AI-driven investment for fast growth!Why Genesis’ woes hurt GBTC isn’t exactly clear, though theories include the fact that many trading firms were Genesis customers, and some of them could have been betting on a narrowing discount.
Losing access to their money could’ve thwarted those trading strategies.The GBTC discount deepened to a record 50% in December after the SECreiterated its reasons for denyingGrayscale’s application to convert the trust into an ETF.There are few questions in crypto hotter at the moment than whether or not U.S.Real Estate Crowdfunding for Tax Optimized Investments ✌️【Temporary Job】✌️Start investing with ₹500 and experience up to 100% returns every month!