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GBTC Premium still negative, BTC still struggling to reach $40,000

2 min read

TL;DR Breakdown

  • BTC has been falling and is trading at around $36,000.
  • BTC price sentiment indicator GBTC Premium is still negative.
  • Before February, GBTC had kept its value positive but has now been negative for 3 months.

BTC gained momentum this year until Elon Musk’s borderline negative tweets commenced. After the China ban, BTC fell further. From a high of $60,000 plus, BTC has dropped to half of its price. To predict the movement of the price of BTC, there are various indicators that exist in the market and one of them is referred to as GBTC Premium.

The Greyscale BTC Trust or GBTC is a BTC or BTC trust that is a part of Greyscale Investments, one of the world’s largest managers that deal in the matters of digital currencies. The trust works pretty well by allowing the investors to grasp an experience of trading in BTC without direct investment and holding the cryptocurrency. This feat is achieved with the help of a regulated investment tool.

The negative value of GBTC Premium

The GBTC Premium as of now trades a low price of $30 while is a significant low from its high of $58.22. This drop of 40 percent in the trading price of GBTC Premium has represented the fall in BTC. Currently, GBTC is trading live on OTCQX which is operational under OTC Markets. Each share of this represents a value of 0.00094716 BTC. Thus, it helps in share tracking of the price of BTC.

GBTC is regulated in such a manner that investors are able to gain an insight into the BTC market and this is why it can be a very accurate representation of the sentiment of BTC’s price. Greyscale products usually at a value that is premium to the NAV or Net Asset Value of the holdings. Therefore, the difference in the value of these holdings and the market price indicates the value for the GBTC Premium.

Before the 23rd of February, this value was always positive and as a result, represented the growth of BTC. The GBTC Premium transitioned from 122.27 percent to a negative value of -17.89 in the middle of May. This means that currently, the inflow of BTC is low, and therefore, GBTC is trading at a discount to the traders. This goes further to prove the relativity of the price of GBTC and BTC.

The future of BTC is still not known whereas several factors are indicating different scenarios. The investors have to trade in a six-monthly period using GBTC Premium. It is also to be noted that to trade, one needs to invest at least a value of $50,000. In all, GBTC Premium might not predict the future value at which BTC will trade but it surely gives an insight into the sentiment of its price. Hence, the valuation is definitely reliable.

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