Data from on-chain analytics platform Coinglass confirms that GBTC shares hit a new record high of -47.2% against BTC/USD on December 8.

GBTC problems are piling up after FTX
In the latest bout of nerves to hit the bitcoin industry since the fall of FTX, the price of GBTC is close to half the price against that of Bitcoin.

Bitcoin’s largest institutional investment vehicle, with assets worth nearly $10 billion, GBTC has faced many challenges in recent years.

Its share price previously traded higher than BTC/USD, resulting in a so-called “GBTC premium.” Since 2021, however, that premium has turned negative, but the resulting “discount” has done little to attract additional institutional interest.

As Cointelegraph reported, with some major exceptions like ARK Invest, GBTC is waning. Meanwhile, operator Grayscale, part of the Digital Currency Group (DCG), has tried to convert it into an exchange-traded fund (ETF), suing US regulators who stand in its way.

Amid the legal battle, FTX has raised liquidity issues elsewhere in the DCG empire, and this has led to suspicions about Grayscale and GBTC. Grayscale’s refusal to show proof of his bitcoin reserves last month added to tensions, though guard Coinbase confirmed the assets were safe.

“Grayscale is in some real trouble if they have to disclose the whereabouts of all GBTC-supporting bitcoins,” Bitfinex’ed a popular commentator wrote in part of a Twitter discussion on the subject this week.

Things got worse this week, however, as Grayscale faced a lawsuit from investor Fir Tree over what it calls “shareholder unfriendly actions.”

GBTC premium vs asset holdings vs BTC/USD chart. Source: Coinglass
Meanwhile, public interest in crypto ETFs has declined this year, according to separate data.

Woo: “Partly bullish” issues for Bitcoin
However, the ratio of GBTC’s share price to Bitcoin’s underlying assets, after barely recovering from previous record lows, sank further.

Related: Why Did Bitcoin Price Drop Today?

“GBTC USD discount on bitcoin NAV [Net Asset Value] is on the express elevator to hell. => Sentiment = Bearish,” summed up Timothy Peterson, investment director at Cane Island Alternative Advisors.

Others lamented the slow pace of change in the United States as fanning the fire.

“Much of the pain could have been avoided this year if GBTC had been converted into a SEC ETF to keep everyone safe!” Investor and entrepreneur Alistair Milne reacted, echoing popular sentiment in recent weeks.

Meanwhile, Willy Woo, creator of stats resource Woobull, argued that the impact of fading GBTC exposure was not necessarily a direct negative for BTC price strength.

“GBTC/DCG/Genesis fears a bearish cloud hanging in the market. But unlike expected, part of the impact was bullish for bitcoin price,” he tweeted on Dec. 5.

“37.5% of people who sold GBTC bought spot Bitcoin to take custody. Selling GBTC does not affect the price of Bitcoin, and buying spot affects the price of Bitcoin.”

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