If history repeats itself, it is possible to spark a 2-4X BTC price run, according to data covering the GBTC premium. Bitcoin may be in for a $100K bull run next if a classic signal coming from institutions repeats its historical trend.
In a March 4 tweet, a senior commodity strategist at Bloomberg Intelligence, Mike McGlone, stated that those seeking clues about what lies next for BTC should look at the Grayscale Bitcoin Trust (GBTC).
Negative Premium May Push BTC To $100K
As bitcoin dropped to $43,000 and continued to hover below all-time highs thereafter, the ‘premium’ on GBTC flipped negative. It means that GBTC shares are trading below their alleged net asset price (NAV); institutional buyers can buy at a discount. In times that have passed, these events have both been quite rare and a pointer for the subsequent price upside.
A negative premium was also observed in March 2021, the start of the bull cycle that has brought BTC/USD from $3,600 to $58,300. McGlone wrote:
“Grayscale #Bitcoin Trust Discount May Signal March to $100,000. Bitcoin’s end of February price disparities on U.S. regulated exchanges portend a firming price foundation, if history is a guide, and are evidence of just how nascent the crypto is.”
At the time of publishing, the GBTC premium was quite lower than at any point since its inception in 2017, at -13%.
Unlike 2021, nonetheless, there might be other factors that are influencing its performance. Among them is competition. GBTC needs now to battle for market supremacy together with proxy exchange-traded funds (ETFs), together with the prospect of most likely appearing on the market soon.
Based on previous reports, Grayscale is projected to lower management fees after new offerings went live from January 2021 onwards. The founder of macro analysis firm Bianco Research, Jim Bianco, highlighted last week:
“Grayscale’s (GBTC) Market Cap is $30 billion. US Purpose Bitcoin ETF (BTCC/CN) is $454 million CAD. It has been trading 6 days. No way a $30 billion GBTC sees enough selling to drive NAV to record negative so only $400 million CAD flows into BTCC.”
Bianco added that the past discount periods had been followed by price rises of between two and four times in magnitude.
Grayscale And Competitors Edge Out Gold
Enthusiasm about the possibility of further gains continues to enter the bitcoin market, with Grayscale CEO Michael Sonnenshein telling McGlone that there are lots of gold outflows that present a “ripe” opportunity for the cryptocurrency sector. He was speaking on February 25 during the Bloomberg Investment Summit:
“There is little doubt in our mind that it is not any kind of coincidence that Q4 2021 saw some of the largest outflows on record from gold investment products at a time when Bitcoin really broke out and hit some of its new all-time high prices.”
Certainly, the narrative surrounding Bitcoin being a dependable digital gold or a digital store of value is a majorly-held narrative that is becoming louder in the investment community.
“Thinking about the popularity of Grayscale products, or really just the ability to gain exposure to digital assets in the form of a security, I think really represents just how much market demand there is.”
This time around, he added, the landscape had very little in common with 2017 and the launch of the first institutional bitcoin products. Is Bitcoin ready to surge towards $100K, or do the bears have other ideas?