‘Grayscale Discount’ Narrows to 10% and Could Shrink More as Lockups Expire

Amid bitcoin‘s volatile price moves this week, a key indicator of market health known as the “Grayscale discount” showed improvement, data shows.

Grayscale’s Bitcoin Trust (GBTC), the largest U.S. investment vehicle for buying bitcoin through a stock exchange, is trading at a 10% discount to its net asset value (NAV), narrower than a near 20% discount a week ago. The discount is the difference between the price of the underlying bitcoin asset and the value implied by the price of the trust’s shares.

Some analysts expect the discount to eventually converge to NAV becausethe trust plans to convert to an exchange-traded fund. As CoinDesk reported on May 14, the set-up might offer an opportunity for retail traders to recapture the discount as profit while still booking any gains from the cryptocurrency itself. In other words, it might be a cheap way of gaining exposure to bitcoin.

Now, an additional factor looms on the horizon that might help to further shrink the discount: the full expiration of lockup agreements that has trapped some investors in the investment vehicle.