First US Bitcoin ETF Is a ‘Failure’ in 2021 While GBTC Discount Remains Near Historic Lows
The first Bitcoin ETF of the United States of America has turned out to be a failure. The year-end reflects a picture where the ETF has underperformed to the extent of trading 30% below the price at which it was launched.
Lower discounts on GBTC are adding to the gloomy picture. Investors are starting to worry about the market, with a few still hopeful about things turning out to be good in the future.
ETF’s Underperformance And GBTC’s Lower Discount
The underperformance of Bitcoin’s ETF was first noted by Holger Zschaepitz, a market commentator. He said that the hype surrounding the ETF had eased.
ProShare Strategy ETF’s performance has turned out to be lower than expected. The value has even gone down below the cash price of Bitcoin. 2021 has definitely ended on a bad note for Bitcoin’s first ETF in the US.
The cash price of Bitcoin left a mark of 74.3374 while the same for ETF was 71.9361.
It has turned out to be a failure, but a sign of hope has been left. Holger Zschaepitz cited that it was a failure for this year, probably signaling that the value can increase in the next year.
Bitcoin’s ETF having a cash price below Bitcoin should not be a problem. Even when both were at the peak, the value stood at more than 100 and 105, respectively. The ETF surpassed briefly at the time when it was launched.
Fluctuations have been in the trend, but ETF crossing Bitcoin was a rare occurrence in the graph.
Another aspect that is keeping investors on edge is the discount being offered on GBTC. It continues to be available at the lowest discount in history.
This has given an opportunity for detractors and believers to come face to face. Detractors believe that this is a worrisome situation, while believers are hopeful that the best will come in the next year.
Year-end has always been the center of discussion with trade taking a hit temporarily.
Believers have support from Morgan Stanley. The investment banking company has indirectly hinted at the possibility that GBTC has a lot to offer when it comes to long-term sentiments. It has even increased its GBTC allocation for the same.
Detractors are justified to be worrying about the market, but they may need some fresh perspective before panicking and making a wrong decision. US regulators are drafting their decision on spot-based products. These products are yet to debut. The tone, however, set by US regulators will have an impact on GBTC and the ETF.
Next year, the schedule is set to convert GBTC into an ETF. It works only if the tone is set greener by regulators. Things can be expected to go down the hill if the tone is set in the opposite direction.