The sudden collapse of UST caused tremendous selling pressure that caught many people off guard. However, the negative macroeconomic conditions that followed have negatively affected the entire cryptocurrency market. Institutional demand has plunged to its lowest level.
Grayscale Bitcoin Trust (GBTC), Hits Lowest Point
Grayscale Investments’ Grayscale Bitcoin Trust is currently trading at a record 33.71% discount on its NAV. The market players were trying to rid themselves of Bitcoin exposure, as cryptocurrency struggles to reach the $20,000 mark.
After a turbulent month, Bitcoin’s inability to sustain a significant momentum shows that it could be difficult for Bitcoin to recover. Market panic continued to sweep the globe, sending shockwaves all around. Grayscale trust products have suffered losses beyond Bitcoin.
Coinglass data shows that shares of Grayscale Ethereum Trust were trading at a negative premium exceeding 34% according to Coinglass. Grayscale Litecoin Trust, (LTCN), and Grayscale Ethereum Classic Trust, (ETHC), are also in a similar situation – they are both in the red by 37.5% & 47.73%, respectively. Bitcoin Cash Trust (BCHG) had a slightly lower negative premium of 8%.
Grayscale is also facing a deadline for its highly-anticipated spot Bitcoin ETF application. The public comment period for Grayscale’s proposal to convert GBTC into an ETF has ended on July 6. The conditions for institutional crypto-based products have become more difficult due to the Terra collapse and the ongoing Celsius investigation.
Grayscale entered 2021 with $20 billion of assets under management (AUM). The skyrocketing value of Bitcoin was a major factor in the crypto fund manager’s success. The AUM increased to over $50 billion in the months that followed.
However, the market has cooled and so have its products. Grayscale currently has $13.3 billion AUM.
CryptoPotato reported that institutional outflows caused by the collapse of total AUM for these crypto funds fell to their lowest point since July 2021. The ongoing volatility caused “fickle” investors, who were not inclined to take on high risk, to “cash in” on the low asset prices. However, overall sentiment remained predominantly bearish.
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