Shares of Grayscale Bitcoin Trust (OTCMKTS: GBTC) Bitcoin prices surged on Tuesday as the crypto market rallied (BTC/USD) and other cryptocurrencies higher.
What is Discount on NAV?
The discount or premium to the NAV of a security is the calculation of the percentage at which an Exchange Traded Fund (ETF) or Closed End Fund (CEF) is trading from the Net Asset Value (NAV). The metric can be up (for premium) or down (for discount) and in the case of Grayscale’s GBTC, the discount or premium is calculated against the value of bitcoin.
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NAV helps track how far the trust’s price has moved (GBTC/USD) is trading at its true value, with the difference being a result of market volatility. Shareholders also cannot redeem their shares.
GBTC, which traded at a premium to bitcoin before the end of February 2021, widened the discount gap to -48.89% on December 13, 2022. But on Monday, OTC-traded shares jumped more than 11% to $9.65 — narrowing the discount to NAV.
A modest gain of 1.7% on Tuesday has pushed the GBTC price to $9.82 again and narrowed the discount to NAV to -38.55%. In the past five days, the price of GBTC has increased by more than 18%. This means that GBTC’s discount to the NAV of its BTC holdings is now seen at mid-Nov 2022 levels. However, the trust price is trading at a -20% or more discount since late December 2021.
Grayscale currently holds 643,572 bitcoins, worth approximately $11.15 billion. According to treasury dataThe BTC holding of the trust is 21% of the total bitcoin supply of 3.065 million.
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