Ideally there would be some sort of "balancing act" then. My overall concern is that investors have lost a lot of faith in Greyscale.
Even if somewhat unfounded, the discount reaching -50% is a risk most investors won't want to unnecessarily take anymore - especially when there more reliable ETFs now available.
My assumption is, those holding GBTC will continue to sell as the discount nears 0%, in order to transfer to more reliable ETF, as confirmed by many GBTC holders. I understand the theory that with a premium, Greyscale would likely be buying coins, but at the same time I think a premium ever sustainably happening again is very unlikely. The main reason why GBTC used to trade at such a premium, as high as 40% in recent years, and much more than that in the early years, is simply because there was no other Bitcoin-based ETF available.
For example; why would anyone with any sense buy GBTC at even a 1% premium, with the current highs fees, when there other ETFs without a premium and lower fees? Only a tiny minority would do that in my opinion. In the meantime, the only realistic direction for the future of GBTC is redistribution into more trusted ETFs. Which is also what you'd expect after Greyscale's effective ETF monopoly has ended. Correct me if I'm wrong here, but GBTC continuing to offload Bitcoin seems highly likely to me, even if it's possible for the selling to stop or even reverse into buying - I don't think that's a reality, at least right now.
Even if somewhat unfounded, the discount reaching -50% is a risk most investors won't want to unnecessarily take anymore - especially when there more reliable ETFs now available.
My assumption is, those holding GBTC will continue to sell as the discount nears 0%, in order to transfer to more reliable ETF, as confirmed by many GBTC holders. I understand the theory that with a premium, Greyscale would likely be buying coins, but at the same time I think a premium ever sustainably happening again is very unlikely. The main reason why GBTC used to trade at such a premium, as high as 40% in recent years, and much more than that in the early years, is simply because there was no other Bitcoin-based ETF available.
For example; why would anyone with any sense buy GBTC at even a 1% premium, with the current highs fees, when there other ETFs without a premium and lower fees? Only a tiny minority would do that in my opinion. In the meantime, the only realistic direction for the future of GBTC is redistribution into more trusted ETFs. Which is also what you'd expect after Greyscale's effective ETF monopoly has ended. Correct me if I'm wrong here, but GBTC continuing to offload Bitcoin seems highly likely to me, even if it's possible for the selling to stop or even reverse into buying - I don't think that's a reality, at least right now.
Is that a bad thing? Grayscale was popular because they offered something close to an actual ETF, while all the real ones were being delayed by the SEC. Since people who really support bitcoin and know what they're doing in the space came in (Fidelity) not many people will choose Grayscale. In fact nobody in their right mind will choose them as long as their fees remain where they are.
The only reason for low outflows is that people have to pay tax getting out, so many will not do that because they'd lose money on this conversion. I don't expect any inflows to their trust in the coming months, but the outflows may stabilize, at least until bitcoin goes up.
The real "problem" that we're facing is that all the big buyers get their coins OTC, while GBTC sells on spot markets. The silver lining in all this is that they're buying so much OTC that they're going to run out after the halving because the main source of OTC sales are miners.
