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Grayscale Bitcoin Trust has suspended new investments after GBTC had a negative premium of more than 15%

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Grayscale periodically suspends its trust-like investment services before turning them on again

Rhythmic BlockBeats news, grayscale suspended the sale of GBTC shares. On March 5th GBTC equivalent shares traded at a record negative price premium of 15%. Grayscale periodically suspends its trust-like investment services before turning them on again. It was not clear if the suspension was part of a normal shutdown.

GBTC shares are trading at a premium to equivalent bitcoins held by the trust, a result of excess retail demand. Institutional clients, meanwhile, will be able to buy shares directly from Grayscale at par. This erratic demand creates arbitrage opportunities where clients can buy shares directly from Grayscale at par, hold them for a six-month lock-up period and then sell them at a premium in the secondary market.

Grayscale completed a six-month lock-up period in February of this year for GBTC shares equivalent to 36,000 Bitcoins, which it issued in August 2020. At the current price of $56,800, the "unlocked" bitcoins add a total of $2 billion to their value, which could add selling pressure to GBTC. This potential impact is relevant, even though the bulk of the trading volume is through premium arbitrage trading by buying BTC futures contracts while selling GBTC shares.

While BTC futures are liquid enough to absorb this volume, retail demand for GBTC shares is likely to decline due to the previously discussed ETF effect -- not to mention the negative sentiment that followed the 26% drop after BTC hit a high of $58,300 on Feb. 21. However, the 15% discount on bitcoin that appeared on March 5 does not appear to be sustainable. Even if there is currently no way for market makers to buy the stocks and convert them back into bitcoin, Grayscale Investments can buy them back and profit from the difference.