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Grayscale Bitcoin Trust to Convert to an ETF, Premium Remains Negative: What’s Next?

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Earlier this Monday, Grayscale Investments announced its plans to transform Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund. Up until recently, GBTC was one of the only investment funds for institutions and retail investors alike. Amidst growing competition, however, the fund’s high management fees and stringent lock-up periods lost favor with many investors. Since February, GBTC had continued to trade at a negative premium — meaning that the fund was trading below the price of Bitcoin. 

In late 2020, GBTC premium shot up to as high as 50% thanks to a surge in institutional demand for Bitcoin. The premium sunk to an all-time low of -14.34% earlier last month. This significant decline was likely the wake-up call Grayscale needed to turn its increasingly outdated investment product around. In a blog post, the investment firm stated that it was “100% committed” to converting its Bitcoin fund into an ETF.

“Today, we remain committed to converting GBTC into an ETF although the timing will be driven by the regulatory environment. When GBTC converts to an ETF, shareholders of publicly-traded GBTC shares will not need to take action and the management fee will be reduced accordingly.”

According to Grayscale, the firm had applied for a Bitcoin ETF with the Securities and Exchange Commission (SEC) back in 2016 and 2017. “[T]he regulatory environment for digital assets had not advanced to the point where such a product could successfully be brought to market,” Grayscale said. They were likely right, as back then, Bitcoin’s institutional interest was sparse at best. However, with Canada approving Bitcoin ETFs earlier this year and the likes of Fidelity recently joining the race, the time seems ripe for Grayscale to finally revamp GBTC. 

Why Grayscale Bitcoin Trust’s Premium Remains in Downtrend

Following the announcement on Monday, GBTC shares rallied 5% as premium bounced from -9.32% to -3.78% — perhaps indicating a renewed confidence from institutional investors. However, the premium plummeted back down to -8.35% on Tuesday. Institutions may have closed their highly-levered positions at the top, as their 6-month lock-up periods ended. 

Grayscale Bitcoin Trust ($GBTC) on Tradingview.com

Featured image from UnSplash 

 



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Turkish crypto exchange halts trading amid reports of police raid

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Major Turkish cryptocurrency exchange Thodex has abruptly halted trading and withdrawals amid reports of police raids, Cointelegraph Turkey reported on Thursday.

Thodex posted an official announcement on Twitter on Thursday, informing users that it has halted transactions for a period of four to five days. According to a statement, the platform stopped trading and withdrawals due to a purported partnership with “world-renowned banks and funding companies” to improve its services.

Thodex said that its clients should not be worried about their investments, stating that “users will be informed regularly” during the suspension period. The exchange had previously announced a six-hour-long maintenance break on Tuesday.

The abrupt suspension of trading and withdrawals has concerned the crypto community, as the exchange has gone radio silent since announcing the interruption.

Local publications speculated that the suspension could be part of an exit scam amid reports that the company’s founder, Faruk Fatih Özer, has fled to Thailand with $2 billion worth of crypto. The founder allegedly left Istanbul Airport on Tuesday, while local authorities have launched a criminal investigation against the firm and raided Thodex’s offices.

Thodex did not respond to Cointelegraph’s requests for comment.

The news comes amid a new wave of concern over the Turkish government’s stance on cryptocurrency regulation. The country’s central bank officially announced a ban on crypto payments effective as of April 30. 

Additional reporting by Erhan Kahraman and Ayse Karaman.