News / What Grayscale’s Products Say About BTC Price Prospects

What Grayscale’s Products Say About BTC Price Prospects


Bitcoin (BTC) looks either like a steal or a highly risky proposition at this point in its price cycle. There are also questions whether BTC actually has a price cycle, or is an asset that is in constant price discovery. 

One tool for mainstream BTC investment is the Grayscale Bitcoin Trust, trading under GBTC on the OTC market. The price of GBTC shares reflects the value assigned to BTC based on mainstream investment. Grayscale holds BTC to cover each share, but does not offer direct access to the coins. Thus, the tool solely reflects buying interest from outside the world of cryptocurrency. For that reason, investment moods and trading behaviors differ, hence GBTC either trades at a big premium or a big discount to actual BTC. 

GBTC shares traded at $13.85 over a slow week for digital assets and BTC. This share price would translate into a price under $14,000 per BTC.

The current discount of around 29% actually diminished from 32% recently, marking a small reversal trend. The actual position of GBTC does not predict BTC prices, but can hint at increased mainstream demand and a readiness of Grayscale to buy and store more physical BTC.

The shift in the trend also matches a spike in the Crypto Fear and Greed Index, up to 14 points from its recent all-time low of six points. 

Will Grayscale Transform GBTC into ETF

The biggest boost for mainstream interest would be the goal of Grayscale to retain its current BTC reserves, but switch the mode of investment into an ETF. So far, such an investment vehicle has been delayed by regulators, only allowing BTC futures funds to launch in the past 12 months. 

Grayscale’s application is still in the mid of a long review process, currently collecting opinions and comments. 

Most letters submitted are in defense of the conversion of the Grayscale fund into a spot ETF. BTC-based funds with spot price tracking have been allowed in Canada, as well as some European markets. Grayscale hopes to rely on its long track record of reporting and relative transparency to ensure the best protection of investor interests. 

The Grayscale approach is also one of the most reliable, as the BTC in the reserves are separate from the overall decentralized financial system. The funds of Grayscale are not in danger of being lent out or used as collateral within riskier crypto ventures. 

BTC Remains Uncertain on Low Volumes

The entire crypto market shows a trend to stagnate and lower volumes, awaiting more guidance from the stock market. Currently, BTC is not decoupled from other investments, waiting out for more of the uncertainty to play out. 

BTC held above $20,710 with trading activity down to $21B in 24 hours. Even Tether (USDT) is grinding to a halt, shrinking its trading activity to $40B in 24 hours. 

USDT supply is also down to 66.8B in total after a series of recent coin burns. USDT is adding to market confusion as its price is now $0.99. This time, the slide in USDT affects all assets, with BTC dominance diminishing to 42.1%, down from a recent peak above 46%. BTC broke the trend where it was expected to regain 70% dominance, as some projects proved resilient and started to attempt recoveries.

One of the scenarios for BTC is to manage a new growth cycle. Currently, BTC is just under its 200MA line, still moving close to historical levels, but also facing uncertainty. One of the predictions considers the current level near the bottom of the bear market, with the potential to spark a new upward move.

But before that scenario materializes, the market must live through the uncertainty. One of the biggest factors remains the long list of non-transparent crypto lending. For now, BTC survived the worst of the liquidations, with Celsius also protecting its collateral down to levels below $14,000 per BTC.

On a positive sign, Solana (SOL) also gained above $40, moving up from previous levels threatening liquidations in its DeFi protocols. The pessimistic scenario is still in play, possibly seeing BTC under $10,000. 

BTC now flows into new protocols, including Avalanche and Cosmos, through newly created bridges. After the fallout of Celsius, new collaterals are getting generated, with Avalanche doubling its BTC collateral in just a few days. BTC remains in demand, though there are signs of miners selling their haul to cover costs and avoid a slide to a lower range.

On the retail side, interest in BTC remains reasonably high, with a record number of wallets storing more than 1 BTC at current prices, as well as intentions to buy and hold coins for the long term.

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