Bitcoin may have traded sideways for a majority of the last month due to Grayscale, but the status quo will quickly change. The Grayscale Bitcoin Trust (GBTC) market premium has just reached its lowest since April 2019, according to data from on-chain analytics resource CryptoQuant.
Thanks to record BTC sales and record demand, Grayscale has hit the headlines regularly this year, but BTC/USD has not managed to gain, despite the inflows.
According to cointelegraph.com, the Trust’s buying premium is at about $6.50 as February starts, having historically reached as high as $40 over the course of its lifetime. Historically, this correlates with the meandering market direction, while for Bitcoin, high premiums equal large upside moves.
The phenomenon was explained by a dedicated report in the technology journal Hackernoon in late December as being related to releases of GBTC shares that were subject to a customary lock-up. Bitcoin continues to shoot higher after they are published when customers bring their profits back into BTC, while the time preceding such activities leads to a lack of market activity.
What is important to note is that as these higher costs and premiums are realized, the market begins to consolidate after unlocking. This causes the premium to shrink again, Hackernoon summarized, until the next unlocking case. With the next unlocking scheduled for Feburary 3, for a continuation of the Bitcoin bull market, anticipation should be building.
“This voids enables premiums to shrink again just like the nine times before,” the article continued, correctly predicting the price behavior for the second half of January. “And it’ll keep shrinking until the next unlocking. Because of this I expect price to either consolidate or sag.”
In the meantime, Grayscale continues to expand its services, as institutional demand usually shows no signs of either Bitcoin or altcoins slowing down. After being closed since December, the Ethereum Trust was reopened this week, while Feburary 25 will see the Bloomberg Crypto Summit as a Grayscale sponsor crypto-focused event.