Grayscale’s Market Share Affected by Canada’s Purpose Bitcoin ETF

Shares listed under Grayscale’s Bitcoin Trust have been trading at a discount for the past few weeks. This may have been triggered by the launch of Canada’s Purpose Bitcoin ETF.

In the recent weeks, Bitcoin holdings at the Grayscale Bitcoin Trust have been trading at a discount. According to a tweet created by Rafael Schultze-Kraft, the shares under the Bitcoin Trust have been trading at a negative discount of 6% since March. The tweet also identified that the discount had started after the launch of Canada’s Purpose Bitcoin ETF. The ETF was launched in February and it had garnered 16000 bitcoin worth around $940 million.

2/ The #Bitcoin holdings of the Grayscale Bitcoin Trust have been flat over the past weeks.

Not surprising, as subscribing to create new $GBTC shares makes little sense as long as existing shares are trading at a discount.

Chart: https://t.co/PrOOzb5278 pic.twitter.com/NyvRlnqIhV

— Rafael Schultze-Kraft (@n3ocortex) April 1, 2021

Rafael Schultze-Kraft, who is also the co-founder and CTO at Glassnode, is not the only professional to notice the market disturbance. The CEO of Galaxy Digital, Mike Novogratz, also tweeted about how Canada’s ETF has affected Grayscale’s numbers.

Schultze-Kraft also noted that Grayscale’s Bitcoin Holdings trading at a flat curve was surprising since it was not viable for investors to create new GBTC shares as the existing ones were trading at a discount.

Grayscale’s current market position

Grayscale is a global leader in digital currency investments. The firm allows investors to use fiat currencies to create shares or trusts that are in the form of cryptocurrencies such as bitcoin or other digital assets. The firm then deposits a given number of cryptocurrencies into its trusts where investors are locked out for six months, after which they can trade their shares over-the-counter (OTC) or through markets.

Since Grayscale’s shares have been trading at a premium for the first time in a long while, many investors are holding shares in arbitrage in the trust with speculations that the spread achieved will cancel off the 10% holding and interest fees accrued during the six month lock-up period.

As of the recent financial statistics released by Grayscale, they had around $45 billion digital assets under their management. This figure was realized across all their trusts. Grayscale has a cumulative of 13 trusts after five new trusts were launched in March. Decentraland (MANA), which is the newest trust, has a total of $17.4 million worth of shares. This is followed by LivePeer (LTP), which is worth $12.3 million, Filecoin worth $8.5 million, Basic Attention Token (BAT) worth $3.7 million and lastly Chainlink (LINK) worth $3.5 million.

Even with the ripple caused by Canada’s Purpose Bitcoin ETF, Grayscale remains a global leader in digital asset management. The Filecoin shares under the firm’s management have been the best performer with a 105% gain in the past week.