When the BTC price fell below $35K, the gray-scale Bitcoin premium rebounded-what does this mean?


Bitcoin (Bitcoin) Has fallen by approximately 44% from its historical high of $64,899, marking the start of its second largest bull market in March 2020.Bad technology“, and pointed out that the flagship cryptocurrency can extend its continued development time. Down to $20,000.

Nevertheless, the weekly newsletter Glassnode Insights issued by the on-chain data analysis service Glassnode, expected The rebound in the price of Bitcoin based on the on-chain indicator in the next few trading days can be used to measure the interest of institutions in cryptocurrencies.

Enough discount

This metric is called the “Gray Premium” and it tracks funds flowing into the “Gray Bitcoin Trust” (GBTC), which is the largest investment tool for institutional investors who wish to gain exposure in the Bitcoin market.

The increase in the grayscale premium indicates that more bitcoins are flowing into the grayscale bitcoin trust. This prompted GBTC to trade at a premium relative to the BTC spot price. Conversely, a reduced gray premium indicates a decline in BTC inflows, prompting GBTC to trade at a price lower than the spot price of Bitcoin.

The Grayscale Bitcoin Trust attracted more than 50,000 BTC reserves throughout January 2021 and the first half of February 2021. During this period, the premium of GBTC was 10-20%, showing an increase in institutional interest.

By 2021, Grayscale BTC holdings. Source: Glassnode

Nevertheless, the premium Below 10% In the first half of February. GBTC began trading at a discounted spot price. During the same period, the spot exchange rate of BTC/USD climbed from a low of US$30,000 to nearly US$65,000 in April. By then, the GBTC premium had fallen below zero.

May 13th, just in The Bitcoin market crash led by Elon Musk On May 19, the GBTC premium reached a peak of 21.23%. It shows that since late February, institutional demand for Bitcoin investment products has declined.

Glassnode Insights pointed out that the sharp drop in prices on May 19 improved the grayscale premium. The indicator returned to -3.8%, indicating that institutional interest (or the belief of very arbitrage traders) rose in tandem with the decline in Bitcoin’s spot price.

After GBTC, the Grayscale Advanced Edition has been restored at a discounted price for 3 consecutive months. Source: Glassnode

Canadian purpose Bitcoin ETF Experienced a similar discount trajectory, There has been capital inflow until late April and early May, followed by capital outflow, which indicates that institutional demand has weakened. Glassnode pointed out:

“However, similar to GBTC, with price adjustments, demand flows seem to be recovering meaningfully, and by late May the inflows have picked up again.”

Is the price of buying bitcoin falling?

The comparison between the lower Bitcoin spot exchange rate and the rebound in GBTC prices shows that institutions have not completely abandoned the crypto market. Instead, it shows that the sell-off has incentivized investors to gain exposure in Grayscale Bitcoin Trust and Greyscale Bitcoin Trust. Canadian purpose Bitcoin ETF. Glassnode wrote:

“Institutional products GBTC and target ETFs are showing signs of recovery, although falling prices provide early signs of the re-emergence of institutional interest.”

The analysis portal also cited some indicators that indicate that most sellers appear to be short-term holders in the latest BTC price drop.At the same time, long-term holders Bought the price fell “firmly believe”.