The Grayscale Bitcoin Trust (GBTC) has seen a dramatic turnaround since the start of the year 2023, with the trust's deep discount recovering since December 2022. GBTC works as a trust which holds bitcoins, allowing investors to purchase the trust instead of investing directly in the cryptocurrency. Throughout December 2022 and January 2023, the GBTC discount to the net asset value (NAV) had climbed up to an all-time high of nearly 50%. As of 5th April 2023, the discount has dropped back down to 36.9%, which is still a far cry from parity with the spot market price of BTC.

Grayscale's sister company, Genesis Trading, filed for bankruptcy at the end of 2022, causing some market uncertainty and a price decrease for BTC. However, Grayscale stated that their trust was running independently and had nothing to do with Genesis, assuring investors and beginning the recovery of GBTC. The recovery of the Grayscale Ethereum Trust (ETHE) has further helped the recovery process. At the end of 2022, the ETHE discount to NAV had risen to an all-time high of 59.62%. By April 5, it had dropped back down to 50.92%, its lowest level since November 2022.

The lawsuit which Grayscale is currently undergoing with the Securities and Exchanges Commission (SEC) might, however, hold the trust back. The SEC denied the filing to turn the trust into a Bitcoin Spot ETF for the second time, and the lawsuit is still ongoing. If Grayscale were to win, it would be a tremendous success for the crypto space, as it would be the first ever BTC spot ETF based in the United States.

Overall, the market's reaction to the deep discount and uncertainty surrounding the trust shows investor confidence is still present and steadily increasing. Although the bears are still active, driving the BTC back down to $27,900, the Bitcoin Fear & Greed Index still indicates buyers are in the market, pointing to buying pressure for the asset while the GBTC recovery continues.



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