The Grayscale GBTC Premium

Date

On the 8th of January 2021 in a note distributed to clients titled “Flows & Liquidity” J.P.Morgan published the following view: “The approval of a bitcoin ETF in the US this year would likely be negative for bitcoin in the near term”. Their main premises are as follows:

  • There is optimism around the prospect of the SEC approving a bitcoin ETF in the US.
  • This will introduce competition for the Grayscale GBTC Trust which at the moment offers the only way for some institutional investors in the U.S. to get Bitcoin exposure. Historically GBTC shares have been trading at a premium to the GBTC Trust NAV ( GBTC Premium ).This new competition will likely lead to a cascade of GBTC outflows and a collapse of the GBTC Premium.
  • Given the flow and signalling importance of GBTC, this GBTC Premium collapse will likely have negative near term implications for Bitcoin.

Unfortunately there was no evidence or claim by JPM that their view was based on quantitative analysis or research. We think it should because the above premises cannot be accepted as unproblematic or generally held beliefs.

The JPM views attracted interest from a wider audience and were also presented by www.coindesk.com on the 8th of January 2021. 

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