Cryptocurrency News

As soon as the price of BTC falls below $ 35K, grayscale bitcoin premium rebound – what does it mean?


Bitcoin (B T c) Has fallen nearly 44% from its all-time high of $ 64,899, indicating the end of its second largest bull market, which began in March 2020. Several analysts, including analysts from BiotechValley Insights, see “Awesome technology“In the bitcoin market, seeing that the major cryptocurrency can increase its ongoing expansion” $ 20,000. Fall to.

Nevertheless, Glasnod Insights, a weekly newspaper released by the on-chain data analytics service Glasnod, an estimate A bitcoin price recovery in the coming sessions based on an on-chain indicator, which serves as a metric to measure institutional interest in the cryptocurrency.

Enough with discount

Dubbed as the grayscale premium, the metric tracks the capital flow in the Grayscale Bitcoin Trust (GBTC) – the largest investment vehicle for institutional investors to gain exposure in the bitcoin market.

The rising Grayscale premium suggests that there is a higher inflow of bitcoins into the Grayscale Bitcoin Trust. This prompts GBTC to trade at a premium in relation to the BTC spot price. Conversely, a low grayscale premium indicates a decline in BTC flows, prompting GBTC to trade at a discount on bitcoin spot pricing.

The Grayscale Bitcoin Trust attracted more than 50,000 BTCs to its reserves throughout the first half of January 2021 and February 2021. GBTC traded at a premium of 10–20% in the said period, indicating a growing institutional interest.

So far in 2021, Grayscale BTC Holdings. Source: GlassNode

Nevertheless, the premium Fell below 10% In the first half of February. GBTC started trading at a discount on spot pricing. The BTC / USD spot rate rose from a low of $ 30,000 in April to about $ 65,000 in the same period. By then, the GBTC premium had gone below zero.

On 13 May. just before Bitcoin market crash led by Elon Musk The GBTC premium reached an all-time high of 21.23% on 19 May. This shows that institutional demand for bitcoin investment products has softened since late February.

But the May 19 price crash improved the grayscale premium, noted Glasnod Insights. The metric swung back to -3.8%, indicating that institutional interest, “or on the very arbitrage trader conviction,” rose in tandem with the drop in bitcoin spot prices.

After GBTC, the grayscale premium is recovering at a 3-month consecutive discount. Source: GlassNode

Canadian Purpose Bitcoin ETF Had to undergo a similar relaxation trajectory, Consistent capital inflows and subsequent outflows in late April and early May in a sign of weak institutional demand. Glasnod noted:

“However, similar to GBTC, demand flows are recovering meaningfully after the price correction and the flow has increased with the increase at the end of May.”

Buy Bitcoin Price Fall?

The difference between the low bitcoin spot rate and the improvement in GBTC prices suggests that institutions have not left the crypto market outright. Instead, it shows that the sell-off has prompted investors to gain exposure to both Grayscale Bitcoin Trust and Canadian Purpose Bitcoin ETF. Glasnod wrote:

“Institutional products GBTC and Purpose ETFs are showing signs of recovery despite falling prices, providing early signs of new institutional interest.”

The analytics portal has also cited metrics indicating that most vendors appear to be short-term holders in the latest BTC price run-down. Meanwhile, long-term holders Price dip bought “With confidence.”