Why has the Grayscale Bitcoin Trust discount hit an all-time high?


Key Takeaways

  • Grayscale is the largest Bitcoin fund in the world
  • Discount to underlying asset (Bitcoin) has reached record levels, breaching 50%
  • Concern about reserves, higher fees and other hurdles explain the discount, which likely won’t close anytime soon

 

The discount to net asset value of the Grayscale Bitcoin trust is at all-time highs. The discount briefly pushed past 50%, before pulling back slightly to where it currently sits at 48.8%.  

This comes off the back of the SEC reaffirming its reasons for denying Grayscale’s application to convert the trust into an exchange-traded fund.

 The Grayscale Bitcoin Trust is the largest Bitcoin fund in the world, but it has rarely traded at the same level as its underlying asset, Bitcoin. The above chart shows that it had, until this year, traded at a premium since its launch compared to Bitcoin.

This fund allows accredited investors to gain exposure to Bitcoin without worrying about storing or managing their holdings. It previously traded at a premium as demand for shares surged, with institutions wanting Bitcoin exposure. This convenience does come at a fee, however – and a rather hefty one at 2%.

Demand falls for Grayscale in 2022

Since March, the Grayscale shares have been trading at a discount to Bitcoin. The fund has $10.7 billion in assets under management, a stark 65% fall in the last year, reflecting the bloodbath in the crypto markets.

But the discount to Bitcoin means shareholders are getting hit twice as hard.

“The fact that Grayscale’s Bitcoin Trust is now trading at nearly 50% discount is just awful for holders of GBTC. It really highlights the vast differences in structure quality between different investment vehicles,” Bradley Duke, co-CEO at ETC Group, told CoinDesk last week.  

A decline in inflows has been borne out of greater competition as many competitive funds have launched, especially in Europe, as well as multiple filings for Bitcoin ETFs in the US. The discount is also because investors have no way to redeem their holdings for Bitcoin in the trust, but all the while are being charged a 2% fee.

However, these factors have typically been dulled by arbitrage traders taking advantage of the dichotomy in prices. But happenings this year have reduced that, too.

Concern about Grayscale’s reserves

Over the last month, concern has swelled in the market that Grayscale’s parent company, Digital Currency Group (DCG) may file for bankruptcy. This is due to the issues surrounding crypto broker Genesis, whose parent company is also DCG.

Genesis have denied they will imminently file for bankruptcy, but the firm was caught up in the FTX collapse and is currently undergoing restructuring. Genesis halted withdrawals on November 15th.

This concern has been elevated by questions around Grayscale’s reserves. Namely, whether they are true to their word and are holding all the underlying Bitcoin securely. With many major crypto companies publishing proof of reserves in the aftermath of the FTX crisis in order to assuage customer fear, Gray scale refused.

“Due to security concerns, we do not make such on-chain wallet information and confirmation data publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure,” Grayscale wrote in a statement.

As I wrote at the time, I really can’t fathom how security concerns are a factor here. The blockchain is built so that this kind of information is available to the public.

Final thoughts

All in all, the discount sums up investors’ concern around Grayscale, as well as the extra fees and other hurdles which exist compared to owning the underlying. Arbitrage trades are self-destructive by nature, and hence it is notable that the discount is so large and has persisted for so long.

Then again, there is risk here, as the same thing which I have been writing about for a while now – a lack of transparency – means that it cannot be known for 100% certainty what is going on behind the scenes. And that is why we are seeing a 50% discount.

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Bitcoin retreats below $18k as Fed raises interest rate to a 15-year high

  • Bitcoin has dropped below the $18k once again following its rally earlier this week.

  • The Federal Reserve raised interest rates by half a point a few hours ago.

  • The total crypto market cap continues to stay above $800 billion.

Federal Reserve raises interest rate once again

The Federal Reserve announced on Wednesday that it had raised its benchmark interest rate to the highest level in 15 years. Thus, indicating that the fight against inflation in the United States is not over. 

The interest rate was increased by half a point, taking it to a targeted range between 4.25% and 4.5%. This latest cryptocurrency news put a halt to Bitcoin’s recent rally. The leading cryptocurrency is down by less than 1% in the last 24 hours and is now trading below $18k. At press time, the price of Bitcoin stands at $17,737. 

The broader crypto market has also been underperforming, having lost more than 1% of its value in the last 24 hours. The total cryptocurrency market cap now stands at around $860 billion.

Key levels to watch

The BTC/USD 4-hour chart remains bullish despite Bitcoin underperforming over the past 24 hours. In the last seven days, BTC has added more than 5% to its value.

The MACD line remains above the neutral zone, indicating that the bulls have not given up control of the Bitcoin market. The 14-day relative strength index of 54 also shows that Bitcoin has not yet entered the oversold region.

If the bears gain bigger control, Bitcoin could decline below the $17,090 support level over the next few hours. However, the bulls still maintain a level of control, and BTC could recover from this slight dip. If that happens, BTC could be trading above $18k soon again.

Where to buy Bitcoin now

eToro

eToro is a global social investment brokerage company which offers over 75 cryptocurrencies to invest in. It offers crypto trading commission-free and users on the platform have the option to manually invest or socially invest. eToro even has a unique CopyTrader system which allows users to automatically copy the trades of popular investors.

Buy BTC with eToro today

OKX

OKX is a top cryptocurrency exchange which offers over 140 cryptocurrencies to invest in. OKX takes customer security very seriously, they store almost all of their clients‘ funds in cold storage, and the exchange is yet to be hacked. On top of this, the exchange offers very low fees and customers can even use their crypto as collateral for loans on the platform.

Buy BTC with OKX today

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Cathie Wood’s Ark Invest buys another $3.2 million worth of Coinbase shares

  • Ark Invest has invested another $3.2 million in Coinbase, bringing its total shares to 5.8 million.

  • COIN is up by nearly 4% during Thursday’s pre-market trading session.

  • Coinbase has underperformed this year and could record losses by the end of the year.

Ark Invest purchases $3.2 million worth of Coinbase shares

Cathie Wood’s Ark Invest revealed a few hours ago that it had purchased $3.2 million worth of Coinbase shares (COIN). The investment firm continues to increase its exposure to the company despite the ongoing bear market.

Following this latest development, Ark Invest now holds 5.8 million COIN shares, worth approximately $228 million. COIN is a part of its tech-focused ARK Innovation ETF (ARKK) as the company doubles down on investments during the bear market.

The latest investment comes a few days after Ark Invest purchased 78,982 shares of Coinbase shares at $3,184,554.24. 

COIN has responded positively to the news of Ark Invest’s latest investment. The stock price is up by 3.8% during Thursday’s pre-market trading session and is now trading at $40.19. 

COIN is down by 83% YTD

Despite performing well over the past few hours, COIN has underperformed since the start of the year. Year-to-date (YTD), COIN has lost 83% of its value, thanks to the broader cryptocurrency market experiencing a bearish trend.

COIN began the year trading at $251 per share but is now trading just above $40 per share. Bitcoin and the other leading cryptocurrencies have lost more than 75% of their value over the last 12 months, a major factor that affected COIN’s performance.

Brian Armstrong, the CEO of Coinbase, revealed earlier this month that he expects the company’s 2022 revenue to decline by 50% or more compared to what they recorded in 2021. He said;

“Last year in 2021, we did about $7 billion of revenue and about $4 billion of positive EBITDA, and this year with everything coming down, it’s looking, you know, about roughly half that or less.”

In 2021, the company generated around $7 billion in revenue, but market analysts expect the figure to drop to $3.2 billion in 2022. 

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Revealed: 5 Best Altcoins to Buy and hold long-term in 2023

Altcoins consistently return the biggest percentage increases out of any digital asset class. Early-stage blockchain projects have the potential to attract millions of users over time and the level of innovation in the space is oftentimes staggering.

With that said, the recent prices look like a prime opportunity to purchase some altcoins for anyone aiming to make longer-term gains, so an altcoin price prediction for 2025 would make for a solid base of comparison. Here is a list of our 5 best altcoin price predictions indicating massive gains by 2025.

#1 Metacade (MCADE) – Best Altcoin – The Biggest Arcade On-Chain

Overview

Metacade is a brand-new GameFi platform that looks ready to take off. The team is building an advanced play-to-earn platform that will become the biggest digital arcade in the world of Web3. Metacade aims to connect GameFi players with endless earning opportunities, as well as provide them with new methods of generating crypto rewards, by taking advantage of some unique features.

The platform aims to become a hub for blockchain gaming, as users are rewarded with MCADE tokens for sharing everything they know about the GameFi space. Through sharing the latest insights, methods, and top play-to-earn titles, the Metacade community can earn an income paid in MCADE. On top of this, Metacade will display the most valuable GameFi alpha directly on the platform, providing a convenient method of accessing the latest information for all blockchain gamers.

MCADE token holders will also be able to vote for which new GameFi projects they would most like to play in the future, helping direct funding to creative developers in the Metagrants program. In this way, the community themselves get a chance to contribute to the development of some of the best up-and-coming gaming applications, freshly built for the platform. 

Among common factors affecting altcoin price prediction in 2025, staking is high on the list. Users at Metacade can stake MCADE tokens to earn a passive yield and will be able to vote in governance proposals as the project matures and aims to become a decentralised autonomous organisation (DAO).

Tokenomics

There are 2,000,000,000 MCADE tokens in total. 70% of this supply, which amounts to 1,400,000,000 MCADE, is being released for the altcoin presale. The Metacade presale is the earliest stage of investment and has been attracting widespread attention from investors across GameFi and the wider world of Web3.

Why buy MCADE?

Metacade has a highly skilled team that is building an advanced GameFi platform with some unique functionality. Not only can players access a wide range of different play-to-earn titles, but they can also directly influence the future of the GameFi industry by voting on Metacade governance initiatives and by providing funding to game developers.

The project looks to be popular among crypto enthusiasts already as it certainly shows a lot of promise for the future. MCADE is being launched at just $0.008 per token and looks set to explode from that level during the presale as more investors get involved. It is worth bearing in mind that the presale comes before the public IDO, which could mean some major price movements from this current level due to the significant long-term potential of the project. 

Altogether, in terms of altcoin price prediction looking ahead to 2025, Metacade stands out as a promising candidate to become the best, with a high multiple thanks to its convergence at the centre of both gaming and crypto p2e. MCADE altcoin price prediction in 2025 stands at $6.00 – $8.00 – a 750 to 1000x increase – hence why it has made the top of our list as the best altcoin to buy.

>>> You can participate in the MCADE presale here <<<

#2 XRP (XRP) – A Global Reserve for Financial Institutions

Overview

XRP is a cryptocurrency that was created by Ripple Labs in 2012. It is the native asset of XRPL (XRP Ledger), the decentralised blockchain network created by Ripple Labs. The XRP protocol aims to provide a faster and cheaper way to send money globally. As well as facilitating cross-border payments, XRP can be used by financial institutions as a reserve currency.

XRP is one of the largest cryptocurrencies by market capitalisation and is often mentioned in the same breath as Bitcoin and Ethereum. It is one of the original cryptocurrencies, being launched 3 years after Bitcoin and 3 years before Ethereum. However, XRP is quite different from these other assets, both in terms of its technology and its use case, as it is designed to serve the central banking system with a low-cost alternative to fiat currency.

Tokenomics

The maximum total supply of XRP tokens is 100,000,000,000. There are currently just over 50,000,000,000 tokens in circulation or approximately 50% of the total supply. There is a schedule built into the protocol to release 1,000,000,000 XRP tokens per month, which started in December 2017.

Why buy XRP?

As cryptocurrency and blockchain technology continues to gain traction across the world, central banks have been looking into adopting digital currencies as a means of facilitating cross-border payments. These digital currencies are known as CBDCs and there has been increasing talk about introducing these altcoins to the global economy.

It is widely believed that XRP will play an important role in facilitating this transition. One piece of evidence that supports this view, is that Ripple Labs have already formed partnerships with some major banks and financial institutions, such as Santander, The Bank of England, and JP Morgan.

The XRP altcoin has been the subject of a long-winded trial with the SEC to determine whether it is a cryptocurrency or a security. However, this is expected to end positively for XRP. Price action for XRP was held back somewhat during the 2021 bull market due to the ongoing SEC trial, but as this concludes, the sky could be the limit for XRP.

XRP Altcoin price prediction 2025: $4.42. This is approximately a 10x increase with a bullish price prediction from the token’s current price, and why it makes it to number 2 on our list of best altcoins to buy. This is due to the fact that the altcoin has a strong use case within the global financial system and looks set to be unshackled from its trial with the SEC in the not-too-distant future.

#3 The Graph (GRT) – APIs for Developers

Overview

The Graph is a decentralised protocol for building applications (dApps) on the Ethereum blockchain. The Graph allows developers to query data from Ethereum using GraphQL, a query language for APIs. GRT is the native token for The Graph, which is used to secure the network and provide access to APIs in the database.

The Graph is a useful tool for blockchain developers, as it collects and collates a broad set of APIs which can be used at the foundation of decentralised applications on the Ethereum network. The Graph is a purely decentralised service that is secured by the Ethereum blockchain, meaning no malicious actor can alter the data being held on The Graph. It is also open source, which ensures transparency.

Tokenomics

GRT has a total supply of 10,000,000,000 tokens, with 69% of this total currently in circulation. The release schedule is set to unlock the remaining tokens at regular intervals over the next 10 years.

Why buy GRT?

The Graph serves an important function in the Ethereum ecosystem. Since Ethereum is open source and provides permissionless access to builders, it also provides open-source tools that enable anyone to freely build using the official resources.

The Graph can extend this functionality, and provide developers with a comprehensive toolkit that can directly help to expand the Ethereum ecosystem. Over time, as more decentralised applications are built and more developers use The Graph, the altcoin price prediction for GRT is that it could rise significantly.

GRT altcoin price prediction 2025: $1.14. This altcoin looks set to reclaim a significant portion of its recent dip and may even push onwards towards its all-time high of $2.34.

#4 BNB (BNB) – The Biggest CEX

Overview

BNB is the official token of Binance, the biggest centralised exchange (CEX) in the world. BNB was initially an ERC-20 altcoin built on the Ethereum blockchain, but has since migrated to Binance Smart Chain, Binance’s native blockchain. Binance Smart Chain is a fork of Ethereum and serves the same functionality as the original Proof of Work protocol that Ethereum has before The Merge in September 2022.

BNB has a number of use cases on Binance, including as a means of paying fees, as a staking vehicle, and as a unit of account for the Binance ecosystem. BNB is also used to power Pancake Swap, a decentralised exchange (DEX) built on Binance Smart Chain.

Tokenomics

There are 200,000,000 BNB in total, with just under 160,000,000 now in circulation. This amount will continue to decrease as tokens are burned on a quarterly basis until the total supply reaches 100,000,000 BNB.

Why buy BNB?

BNB’s price is closely tied to the success of Binance and as the exchange has grown in popularity, so too has the altcoin price prediction of BNB. As cryptocurrency continues to expand across the world, centralised exchanges like Binance are expected to play an important role. They provide a useful and easily accessible method of buying and trading cryptocurrencies.

BNB also has a burning mechanism as part of its protocol, where a percentage of the total fees paid on the network is taken, and the equivalent number of BNB tokens are removed from circulation every quarter. This means that the total supply of BNB declines every 3 months, which also means that every BNB in circulation becomes more valuable over time.

BNB altcoin price prediction 2025: $2800. As Binance no longer needs to compete with FTX at the top of the CEX charts, BNB altcoin looks set to skyrocket during the next bull market as these moments typically attract more users. Combined with a deflationary supply, the token could rise 10x from its current price.

#5 Splinterlands (SPS) – Popular TCG

Overview

Splinterlands is a digital trading card game that uses blockchain technology. The Splinterlands platform allows players to purchase, trade, and battle with digital cards that have been released as NFTs. The game is very popular, with over 1 billion different battles having taken place between players in PvP matches.

Splinterlands uses Splintershards (SPS) as a governance token for the platform. Players can use SPS to vote for different proposals that can directly influence the future of the platform, including new features, and treasury management. Splinterlands has a second native token called Dark Energy Crystals (DEC) which is used for rewards.

Tokenomics

There are 967,721,814 SPS tokens in total, with approximately 87% of this total currently in circulation.

Why buy SPS?

As the Splinterlands platform grows in popularity, demand for SPS is expected to grow alongside it. Splinterlands offers an advanced trading card game that can serve a large number of users across the world with Play-to-Earn functionality.

Through trading digital assets on the platform’s integrated exchange, Splinterlands gives more control back to gamers and generates liquidity for token rewards. The game is well-designed and has already seen major user growth even though it only launched in July 2021.

SPS price prediction 2025: $1.63. Having attracted a significant number of users in a short space of time, Splinterlands looks ready to expand upon its recent success. If the project continues to grow, then the SPS altcoin will benefit from higher demand and the price prediction is that it could rise significantly as a result. Whist it hasn’t made the top list, we still consider this one of the best altcoins you can buy right now.

Conclusion: Metacade is the Best Altcoin to Buy – A Big Opportunity Despite Bear Market Blues

Altcoin price crashes can be brutal, that much is certain. We have seen several key projects capitulate during recent months, including both the FTX and Terra ecosystems. The knock-on effects of these projects collapsing have been catastrophic for altcoins, and prices have dipped across the board.

However, attentive investors see a huge opportunity ahead of them. The 5 best altcoins in this list have high price predictions for 2025.

MCADE price prediction 2025: $6-$8 (750x-1000x from current price)

XRP price prediction 2025: $4.42 (10x from current price)

GRT price prediction 2025: $0.55 (9x from current price)

BNB price prediction 2025: $2800 (10x from current price)

SPS price prediction 2025: $1.63 (40x from current price)

Projects that remain strong fundamentally represent a prime buying opportunity at these low prices and these altcoins are very likely to make serious gains even before the next bull market comes around.

Metacade looks set to explode during its presale with native MCADE being launched at only $0.008 per token. While it could do some major percentage increases over time, all the altcoins listed here look set to have a big future ahead. This recent dip looks more like a flash sale than anything else, which means that long-term investors have plenty to look forward to.

Buy XRP on eToro here.

Buy GRT on eToro here.

Buy BNB on eToro here.

Buy SPS on PancakeSwap here.

You can participate in the MCADE presale here.

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Crypto winter may not end anytime soon


Key Takeaways

  • Crypto is one year into a vicious bear market
  • This is the first time crypto has experienced a bear market in the wider economy, too
  • With too many negative macro variables, and the zero-interest rate era over, it seems naïve to think crypto can bounce significantly in the short-term

 

Anyone betting on a swift recovery in the crypto markets might want to reassess.

If you are familiar with my analysis, you will know I have been bearish for a while. This mainly comes down to the macro setup, as the economy reels in the face of this new paradigm of high-interest rates.

Crypto represents one of the highest-risk asset classes around, and hence was always going to the struggle once the rug was pulled out from under it. And that is what has happened, with Jerome Powell and the Federal Reserve pulling that rug out mercilessly.

With this macro backdrop in this position, there is a ceiling in place. Crypto will not rise until inflation is beaten and interest rates peak. Currently, T-bills are trading at 4%, but this will likely rise to 5% in early 2023.

There is still concern that inflation, which does seem as if it has peaked, will nonetheless persist for some time. The labour market has yet to feel real tightness, while demand has been subdued but not significantly.

More bad news

This landscape what was led me to declare that crypto could be one bad event away from a  meltdown. It was range-bound at the $20,000 mark for too long, unable to break out while restrained by the bearish sentiment in the wider markets.

I didn’t expect that event to be quite so seismic, however. FTX’s implosion represents a watershed moment for crypto. I believe it will cause even greater harm than what most forecast.

We saw credit agency Moody’s place Coinbase’s bonds on review for downgrade, hinting at the detrimental action that could follow the exchange’s insolvency. I wrote a piece analysing the deluge of Bitcoin flowing out of exchanges, showing that trust had been broken and was at an all-time low.

In fact, a pretty staggering 200,000 bitcoins flowed out of exchanges less than a month after the FTX collapse. And even Cathie Wood is warning of a pullback in institutional adoption.

 
 

They say “be greedy when others are fearful”, but I’m not sure that applies here. Cryptocurrency is at a fork in the road. It has never existed during a bear market in the wider economy before – remember, Bitcoin was launched in 2009, and hence has experienced nothing but an explosive bull market in financial assets.

Now, it is different. Contagion is again swirling, crypto’s reputation is in tatters and the money printer is no longer propping everything up. Times are tough.

Previous crypto winters

Against this context, this environment is unprecedented for crypto. This is why I believe that extrapolating past cycles to current conditions is naïve. It is a lot easier to bounce back when interest rates are at 0% and the rest of the economy is booming. Not only that, but the scale of the capital destruction this time around is much greater, given crypto grew so much during the pandemic years.

Having said that, there will come a time when inflation is beaten. There will come a time when interest rates are no longer being hiked. This is the cyclical world we live in, and hence risk assets will rise again.

I just believe that this time, the winter may last a little longer than a lot are expecting. And when looking at previous cycles, the winters lasted long then, too. The below chart plots the Bitcoin price back to 2014, showing this well.

 

Following the peak of close to $20,000 in December 2017, it was not until Q4 of 2020, deep into the pandemic, that Bitcoin once again breached this mark. That marked a near 3-year fallow period, where investors failed to enjoy any significant gains in the crypto world.

We are one year into this bear market now, both in crypto and financial assets in general. Forecasting the future in crypto will only ever end with you looking silly, but I’ll try anyway. I would be surprised if we were beyond halfway through this bear market.

As the winter snap hits hard in Europe and people feel those high energy prices, the war in Ukraine rages on, and inflation continues to persist stubbornly, it just feels naïve to think crypto could rise anytime soon.

Of course, that could theoretically change in an instant. Positive news out of Ukraine could send markets north in an instant, but that is impossible to predict. I think the base case, however, is a longer period of pain ahead than a lot of people realise.   

 

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