Bitcoin might have traded sideways for most of January due to Grayscale. However, the status quo might change soon. Based on data acquired from CryptoQuant on-chain analytics resource, the price premium of the Grayscale Bitcoin Trust (GBTC) dropped to its lowest since April 2019.
Grayscale Lock-up Ends Wednesday
Grayscale has made it to the top headlines many times this year due to record bitcoin purchases and record demand. Despite these inflows, bitcoin has not continued to gain. As February starts, the Trust’s purchase premium is at almost $6.50 after previously rising to as high as $40 in the course of its existence.
That historically coincides with the meandering price direction, while the big premiums equal huge upside moves for Bitcoin. In late December, one dedicated article in technology magazine Hackernoon highlighted the phenomenon as being integrated to releases of GBTC shares that have been subject to a customary lock-up.
After they get released, Bitcoin seems to rise higher as traders and investors put their profits back into bitcoin, while the time that comes before these events corresponds to a lack of price action. Hackernoon summarized:
“What’s important to know is once these higher prices and premiums are realized after unlocking, the price goes on to consolidate. This lets the premium shrink again before its next unlocking event.”
With the next unlocking set for February 3, the expectation should be building for a continuation of the bitcoin bull run. The article predicted the price behavior for the second half of January:
“This voids enables premiums to shrink again just like the nine times before. And it’ll keep shrinking until the next unlocking. Because of this, I expect the price to either consolidate or sag.”
No Slowdown For Grayscale Investment
Grayscale in the meantime continues to expand its offerings as institutional interest widely shows no signs of slowing for either altcoins or bitcoin.
This week saw its ETH Trust reopen after being closed since December. On February 25, Grayscale will sponsor a crypto-focused event known as the Bloomberg Crypto Summit.
GBTC had around $21.8 billion in assets under management as of February 1 while the Ether (ETH) purchases have remained on pause since December 10.