GBTC impacts spot prices of Bitcoin in an indirect way...

There's been some commentary of late about how the upcoming unlocking of a large amount of GBTC shares will impact the spot markets for bitcoin.

By spot markets I mean the exchanges where bitcoin actually trades and is priced.

Many people seem to think there won't be much of an impact, and I am one of them, but there will be some indirect impact that will likely impact prices to some degree.

Here's how...

When the price of GBTC trades at a premium, it incentivizes investors to buy bitcoin on the spot markets and then send them to Grayscale in exchange for shares of GBTC.

This creates the opportunity to get some free premium with your bitcoin purchase.

However, when GBTC trades at a discount, like it is now, something different happens...

(Source: https://twitter.com/woonomic/status/1412265619957846025)

When GBTC trades at a discount to its NAV is incentivizes investors who want bitcoin exposure to buy GBTC instead of buying bitcoin in the spot markets.

This removes some of the buying pressure in the spot markets.

This is likely what we are seeing right now.

I know first hand because the bitcoin I bought recently, I bought GBTC instead of buying bitcoin off an Exchange.

The reason was the 12% discount the shares are currently trading at.

Some think there is going be an increase in the discount in the coming weeks when these large lock up periods expire, driving demand away from spot markets to GBTC.

We are about to find out how true that is as the majority of the shares become unlocked by the first week of August.