What’s the discount to NAV?
The discount or premium to NAV of a security is the calculation of the percentage at which an exchange traded fund (ETF) or closed end fund (CEF) is trading from the net asset value (NAV). The metric can be above (for premium) or below (for discount) and in the case of Grayscale’s GBTC, the discount or premium is calculated against the value of Bitcoin.
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The NAV helps to track how far the trust’s price (GBTC/USD) is trading from its true value, with the difference being a result of market volatility. Shareholders cannot also redeem their shares.
GBTC, which traded at a premium to Bitcoin prior to late February 2021, saw an increased widening of the discount gap to hit -48.89% on 13 December 2022. But on Monday, the OTC-traded shares jumped more than 11% to $9.65 – narrowing the discount to the NAV.
The slight gains of 1.7% on Tuesday have again pushed the GBTC price to $9.82 and see the discount to NAV narrow to -38.55%. Over the past five days, the GBTC price has soared more than 18%. This means GBTC’s discount against the NAV of its BTC holdings is now at levels last seen in mid-November 2022. However, the trust’s price has traded at -20% or more discount since late December 2021.
Grayscale currently owns 643,572 bitcoins, worth about $11.15 billion. According to treasuries data, the trust’s BTC holdings account for 3.065% of the total Bitcoin supply of 21 million.