(Bloomberg) — The world’s biggest Bitcoin fund is selling off faster than the cryptocurrency itself.
The $32 billion Grayscale Bitcoin Trust (ticker GBTC) has plunged 20% this week, outpacing a 13% decline in the world’s largest cryptocurrency. GBTC’s once-massive premium to its underlying holdings has evaporated as a result, with the price of GBTC closing 0.7% below its underlying holdings on Wednesday — the first discount since March 2017, according to data compiled by Bloomberg.
The vanishing premium suggests that after billions poured into GBTC as investors sought exposure to Bitcoin’s dizzying rally, investors are looking for the exits as the climb stalls, according to Bloomberg Intelligence.
“This is panic or profit-taking selling,” said Eric Balchunas, BI’s senior ETF analyst. “It’s almost like the price of GBTC is an amplified version of Bitcoin price.”
Bitcoin surged to a record of over $58,000 last weekend, but has stumbled since. The cryptocurrency fell another 1.4% on Thursday, on pace for its worst weekly pullback in a year.
Michael Sonnenshein, chief executive officer of Grayscale Investments, acknowledged the risk of GBTC’s premium disappearing while speaking in a panel for the Bloomberg Crypto Summit on Thursday.
“It’s certainly a risk, no question about it, but ultimately price discovery in GBTC every day is driven entirely by market forces,” Sonnenshein said.
(Updates with comments from Michael Sonnenshein of Grayscale in the sixth paragraph.)
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