Pension funds or other funds looking for an opportunity to switch to Bitcoin continue to see investing in BITW and GBTC as the easiest way to buy cryptocurrencies. According to Bloomberg ETF analyst James Seyffart, this group doesn’t have more options if they really want to get into Bitcoin. Therefore, they are willing to pay 245 percent premium over their net asset value.
The sharp rises in the bitcoin price and the surpassing the $ 24,000 threshold brought the BTC craze to another dimension. According to the data obtained from Bloomberg; The price of Bitwise 10 Crypto Index Fund is traded at a 245 percent premium compared to its net asset value. On the other hand, the premium rate in Grayscale Bitcoin Trust (GBTC) has also increased over 35 percent with this rally.
Such rapid rises often accelerate corporate or individual customers who are still skeptical about Bitcoin but do not want to miss profit opportunities to buy the largest cryptocurrency through brokerage firms such as BITW or GBTC. Since this investment group still has questions about BTC, it prefers such brokerage firms over direct investment. Therefore, the price paid is also increasing.
No more options for this group
Bloomberg ETF analyst James Seyffart said, “The question to be asked here is not actually” Does it make sense to pay that much premium? ” Because there is absolutely no logic in paying this price. Some premium rates are acceptable, but if they really want to enter Bitcoin, there are no more options for this group, ”he comments.
These changes cause a significant difference between the product price and the net value of the asset. These significant fluctuations can occur in the $ 5 trillion exchange traded fund (ETF) world, especially in high volatility periods such as March, but rarely exceeds 3 percent. When this happens, expert traders under the name of authorized participants take advantage of the gap by arbitrage and get their ETF shares.
It should be noted here that the US Securities and Exchange Commission has not approved an ETF for cryptocurrencies and therefore is not a broker for Bitwise and Grayscale products. Withdrawals are not allowed in both investment instruments. This means that a certain number of shares have been issued. However, GBTC gives second offer right to institutional investors who want to buy Bitcoin. This causes excessive discount or premium (price increase) when supply and demand imbalances increase.
Investor demand who want to reach Bitcoin in other ways is too much
Speaking to Bloomberg, Nate Geraci, chairman of the investment consultancy firm ETF Store, said:
“The bonuses show the excess demand of investors who want to reach Bitcoin, not directly or with the help of an exchange, but in other ways. It is also mind-boggling that the regulators do not allow the retail investor to access these products and at the same time not allow the ETF, which will solve this premium problem. ”
Considering that the Bitcoin price is $ 23,800, investors pay $ 32,000 for BTC with a 35 percent premium. In BITW, which does not hold only Bitcoin, this price rises to 82 thousand dollars with a 245 percent premium.
Still, retirement funds or other portfolios looking for an opportunity to switch to crypto continue to see investing in BITW and GBTC as the easiest way to buy crypto money without using a digital asset platform.