Bitcoin News
Grayscale Bitcoin Trust history and the narrowing discount
Grayscale Bitcoin Trust (GBTC) holds approximately 156,279 bitcoin as of March 2026. This legacy product launched in September 2013 when bitcoin cost about $129. Since that launch, the trust has seen a 2,787 percent increase in value. While Grayscale manages many products, including funds for Ethereum Classic and ZCash, the Bitcoin trust remains the primary driver of the firm. Total assets under management for Grayscale’s non-bitcoin trusts sit at $56 million, which accounts for only 6 percent of its total portfolio. The Bitcoin trust alone oversees $10.3 billion in assets.
The product structure creates a significant price gap between the fund and the assets it holds. Because GBTC operates as a closed-end fund, it lacks the arbitrage mechanism used by exchange-traded funds to keep market prices tied to net asset value (NAV). This absence of a redemption mechanism caused the discount to reach a peak of nearly 50 percent in December 2022. Investors often face a choice between selling at a discount or holding the position while paying a 2.00 percent annual fee.
| Metric | GBTC | FBTC |
|---|---|---|
| Expense Ratio | 1.50% | 0.25% |
| Assets Under Management | $10.3B | $15.3B |
| Beta | 1.8866 | 1.8779 |
| 1Y Total Return | -27.09% | -26.17% |
The arrival of cheaper competitors
Fidelity Wise Origin Bitcoin Fund (FBTC) changed the competition in January 2024. FBTC carries a 0.25 percent expense ratio, which is much lower than the 1.50 percent charged by GBTC. On a $100,000 position, an investor pays $1,250 more per year with GBTC than with FBTC. This fee difference costs investors money every year they hold the more expensive fund. Since its launch in January 2024, FBTC has accumulated $15.3 billion in assets, surpassing the $10.3 billion held by GBTC.
The market for bitcoin exposure has expanded beyond Grayscale. BlackRock also entered the space with its iShares Bitcoin Trust (IBIT), which leads the category in assets and trading activity. These newer funds attract capital because they use the ETF structure to track bitcoin prices more efficiently. For example, FBTC posted a -26.17 percent total return over the last twelve months, while GBTC saw a -27.09 percent return. Both funds show high sensitivity to price swings, with betas near 1.88. This means a 10 percent decline in bitcoin results in roughly an 18 percent drop in the fund value.
You should consider how these fee gaps impact your long-term holdings.
Regulatory shifts and the narrowing discount
The discount to NAV for GBTC fell to 15.9 percent by the close of the market on Friday. This represents the lowest level the discount has reached since December 2021. This movement follows reports that the SEC will not appeal a court ruling regarding Grayscale’s attempt to convert GBTC into a spot bitcoin ETF. A three-judge panel in the U.S. Court of Appeals for the D.C. Circuit ruled in August that the SEC must re-evaluate the application.
Investors view the narrowing discount as a signal of optimism regarding the potential conversion. If the conversion happens, the redemption mechanism inherent in the ETF structure would likely remove the discount. This possibility drove the discount from over 40 percent earlier in the year down to current levels. However, the SEC could still deny the application on different grounds.
| GBTC Performance Metric | Value |
|---|---|
| Year-to-Date Return | -5.06% |
| 1Y Total Return | -27.09% |
| Max Drawdown | -53.75% |
| Current Drawdown | -34.06% |
The narrowing gap also reflects the fact that GBTC has pushed higher than bitcoin year-to-date. GBTC rose 146.4 percent in that period, while bitcoin gained 67.6 percent. This outperformance happens despite the ongoing competition from funds like FBTC. Will the SEC eventually allow the conversion despite its history of denials?
