The Grayscale Bitcoin Trust has seen massive adoption rates in recent times, as it provides retail investors with a way to add Bitcoin exposure to their portfolio through a traditional brokerage account.
This fund caters to multiple investor bases, including non-tech savvy investors who may be intimidated by cryptocurrency exchanges, investors looking to add BTC exposure to their 401Ks, and funds who want to indirectly invest in Bitcoin in a regulated way.
Demand for GBTC has rocketed in recent times, causing it to trade at a massive premium over spot Bitcoin.
This demand may point to the massive growth of long-term “hodlers” who are adding BTC to their portfolios and 401Ks.
Grayscale Bitcoin Trust sees growing premium over spot BTC
Each share of the Grayscale Bitcoin Trust accounts for roughly one-thousandth (0.00096788) of a total Bitcoin.
At the time of writing, the GBTC is trading at $11.26. This means that investors in the trust are effectively buying Bitcoin at well over $11,000.
Jason Williams, general partner at Morgan Creek Digital, pointed to this premium in a recent tweet, saying:
“To own 1 Bitcoin in the Grayscale Bitcoin Trust it will cost you about $11,240 or about 1000 shares of GBTC. That’s the premium.”
This premium elucidates that the trust has seen booming demand in recent times, with investors potentially “fomo-ing” into BTC in order to gain exposure to an asset that could be inversely correlated to the traditional markets.
GBTC’s premium may also be driven by increasing demand for Bitcoin amongst institutional investors.
Their interest in the nascent asset could have potentially been sparked by recent comments from legendary macro investor Paul Tudor Jones regarding the vast potential BTC has to see massive growth.
GBTC investors likely taking a long-term approach to their investments
Kyle Davies – co-founder of Three Arrows Capital – explained in a recent tweet that the GBTC investors who have added it to their 401Ks are arguably the “best BTC HODL’ers.”
He explains that the addition of GBTC shares to a tax-efficient retirement account like a 401K is a sign that they are planning on holding the shares over a multi-decade period.
“These investors wouldn’t have invested in BTC otherwise and are price insensitive because they plan to hold for decades in a tax efficient 401K. They are the best HODL’ers.”
If more investors begin moving to add Bitcoin exposure to their 401Ks via the Grayscale Bitcoin Trust, this could reduce the amount of Bitcoin circulating on exchanges, thus lessening its daily volatility.