Bitcoin Premium on Grayscale Regains Stability After Record Dip

Azeez Mustapha



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The recent crypto market crash reportedly sent the Bitcoin (BTC) premium on Grayscale down a -21% slope, a multi-year low. However, the premium appears to have stabilized a bit around -4% over the past few hours.

That said, this metric could return to positive levels later next month, as many GBTC investors will cash out.

Following a massive growth in AUM between late 2020 and early 2021, which saw the company grow by over ten folds, capital inflows have dried out. The drop in fresh capital got triggered by increased competition from several Bitcoin ETF launches in Canada and Europe and several filings in the US.

The deviation between supply and demand leads to the emergence of a premium. A premium represents the difference between the price of an asset (in this case, Bitcoin) and the value of the issuing trust’s shares.

Usually, premium increases whenever the demand for GBTC rises and vice-versa. This metric reached a significantly high level earlier this year when institutional investors went on an accumulation frenzy. However, it dropped to negative territory a few weeks ago as demand plunged.

According to the company’s vesting schedule, most positions should get released by the end of June. That said, institutional investors would rapidly dispose of their holdings which could ease the downward pressure on the fund.

Key Bitcoin Levels to Watch — May 25

As predicted in our last analysis, Bitcoin has negated the downwards trend represented by the descending channel in our chart, following a clean break above the $36k level yesterday. The benchmark cryptocurrency has fallen into a mild consolidation after two failed attempts to break above the $40k resistance.

BTCUSD – Hourly Chart

Nonetheless, the 50 SMA keeps providing ample support for BTC and has just acted as a launchpad for the cryptocurrency a few hours ago.

We expect to see another attempt towards the $39.5k – $40k resistance area over the coming hours, as the 50 SMA shields the cryptocurrency from more dips.

Meanwhile, our resistance levels are at $39,500, $40,000, and $41,000, and our key support levels are at $37,500, $36,000, and $35,000.

Total Market Capitalization: $1.62 trillion

Bitcoin Market Capitalization: $710.6 billion

Bitcoin Dominance: 43.7%

Market Rank: #1


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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.

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