The dramatic collapse in UST brought tremendous selling pressure, catching many off-guard. But the subsequent negative macroeconomic conditions have adversely affected the cryptocurrency market as a whole, with institutional demand plunging to the lowest levels.
Grayscale Bitcoin Trust (GBTC) Hits Lowest Point
The Grayscale Bitcoin Trust, an investment vehicle provided by asset manager Grayscale Investments, is now trading at a 33.71% discount to its NAV, a record low. This essentially depicted the desperate market players trying to get rid of their Bitcoin exposure as the cryptocurrency struggles around the $20,000 mark.
Bitcoin failing to secure a meaningful momentum following a turbulent month depicts that the dark days for the asset could last for an extended period. The bearish chaos continued to engulf the market sending shockwaves across the board. As a result, the losses for Grayscale trust products are not only limited to Bitcoin.
According to data compiled by Coinglass, shares of Grayscale Ethereum Trust (EETH) were also trading with a negative premium of over 34%. Furthermore, Grayscale Litecoin Trust (LTCN) and Grayscale Ethereum Classic Trust (ETHC) are in a similar position – in the red by 37.5% and 47.73%, respectively. Bitcoin Cash Trust (BCHG), on the other hand, had a more minor negative premium of 8%.
Grayscale has also been facing an impending deadline for its much-anticipated spot Bitcoin ETF applications. Its proposal to convert GBTC to an ETF is also going through a public comment period, the deadline for which is July 6. However, conditions for crypto-based institutional products have become increasingly opposing, more so due to the recent Terra collapse as well as the ongoing Celsius investigation.
Institutional Exodus
Grayscale entered 2021 with a massive $20 billion in assets under management (AUM) under its wings. Much of the crypto fund manager’s achieving the feat was due to Bitcoin’s skyrocketing price. In the following months, the AUM jumped to more than $50 billion at one point.
But as the market cooled down, so have its products. Currently, Grayscale sits at $13.3 billion AUM.
CryptoPotato reported on massive institutional outflow as total AUM for such crypto funds tanked to their lowest level since July 2021. Amidst a weak risk appetite, the ongoing volatility drove “fickle” investors to “cash on” the depressed asset prices while the aggregate sentiment remained predominantly bearish.