Daily Bitcoin On-Chain Snap #13

Grayscale Premium remains suppressed despite this week’s rally

The Greyscale Bitcoin trust is a $35bn behemoth and the largest investment vehicle for institutional investors looking to gain exposure to bitcoin. Notably, the Greyscale premium exists due to the difference between the underlying value of Bitcoin Trust shares (GBTC) and the current market price of Net Asset Value (NAV), which is dictated by capital flows and sentiment. Greyscale was able to attract more than 50,000 BTC to its reserves throughout January as the premium peaked at 30%. As such, institutional appetite disappeared, as yields compressed and went negative for most of 2021 with an average 10-20% discount in GBTC. This resulted in muted inflows from institutional investors and can be interpreted as positive for BTC as capital flows reverse with renewed interest in the asset class.

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Whales bought $1.6BN worth of BTC in under 5 minutes on 6 October

The spike seen in BTC today is attributed to coordinated purchases amounting to $1.6bn in BTC. What is surprising is the muted levels of short liquidations. This suggests a one-sided market, as the rally is not attributed to cascading liquidations but rather whale accumulation and waning sell-pressure. This is positive for BTC’s momentum given the asset is up +27% in October.

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