- Peter Schiff, a Bitcoin critic, says Grayscale may cause Bitcoin to dip further
- The comment came in after GBTC closed at -5%.
- The dip will cause Grayscale to sell its Bitcoin reserve.
Falling GBTC may cause Bitcoin to drop further
A popular Bitcoin antagonist, Peter Schiff, revealed through a tweet that the falling GBTC premium may cause the price of Bitcoin to drop further. He stated that the GBTC dropped 5% below its net asset value (NAV). CNBC suggests that the falling GBTC premium points out the fact that investors are looking for an exit as it appears that the Bitcoin rally has ended.
Amid the recent slump of Bitcoin, GBTC has also experienced a 20% dip this week alone. Currently, the market price of GBTC and the BTC holdings per share are currently $45.63 and $47.42 respectively.
In five years, this happens to be the first time that GBTC shares are trading at a discount to Bitcoin price. Peter Schiff foresaw this as he revealed through his tweet that he had earlier cautioned about its occurrence. He added that the 2% annual management fee of GBTC makes it even dangerous than Bitcoin.
What does the falling GBTC premium mean?
Schiff noted that since Grayscale is the largest custodian of Bitcoin right now, the falling GBTC premium may cause a further drop in the price of Bitcoin. He added that the drop in premium may result in Grayscale liquidating some of their Bitcoin. Bitcoin is currently trading below $45k and the GBTC premium drop may cause BTC to dip further.
He noted that they will have to sell their Bitcoin to make up for the 2% annual management fee. This is a very bad situation for investors, as the GBTC is the only way through which U.S investors buy Bitcoin on the stock market.