Lyn Alden suggested that the collapse of grayscale neutral arbitrage contributed to the decline in the price of Bitcoin.

Lyn Alden, founder of Lyn Alden Investment Strategy, a company known for providing market research to a range of private investors, finance professionals, and institutions, argued in a recent tweet that the collapse of neutral grayscale arbitrage played an important role in the Leadership played by Bitcoin has price.

A popular investment vehicle for institutional Bitcoin trading, Grayscale Bitcoin Trust (GBTC) is a financial product managed by Grayscale Investments, a multi-billion dollar cryptocurrency company.

This publicly traded product holds a small amount of Bitcoin in a custody account for every share offered to investors, which is one of the only ways for accredited and institutional investors in the United States to gain legal access to Bitcoin.

GBTC drop plays a role in bitcoin drop

Alden said skeptics and critics who focused on Tether’s (USDT) impact on Bitcoin over the past year would “probably do better to focus on grayscale arbitrage trading.”

Alden further argued that the new competition and newcomers to the crypto market have taken the unique element of GBTC, making it less attractive to investors, especially investors, with the presence of Bitcoin Exchange Traded Funds (ETFs) and others.

This resulted in a decline in grayscale bitcoin purchases, which inadvertently impacted the market. In Alden’s words:

“After the biggest buyers had disappeared, of course more private investors poured into euphoria in Altcoins, Elon’s ESG backtracking, leveraged traders were liquidated during corrections, traders left …”.

Bears, who focused on Tether’s impact on Bitcoin over the past year, would probably have been better off focusing on neutral grayscale arbitrage trading instead.

When the new competition in the market takes away GBTC’s premium to NAV, the biggest Bitcoin buyer stops buying. pic.twitter.com/RoAarfw58N

– Lyn Alden (@LynAldenContact) June 28, 2021

“Bears that have focused on Tether’s impact on Bitcoin for the past year would likely do a better job if they focused on neutral grayscale arbitrage.

When the new competition caused the market to take away GBTC’s premium on net asset value (NAV), the biggest Bitcoin buyers stopped buying.

GBTC traded negatively throughout the year

GBTC hit a record low earlier this year as it traded at a negative premium to its net worth.

According to the Data After that, the GBTC premium hit a low of -18% and analysts linked its decline to a collapse in institutional investor demand for GBTC.

Market experts also attribute the decline in GBTC’s NAV to the high management fees, which are significantly higher than those of the competition. GBTC charges up to 2% per year while some of their competitors charge between 0.40% and 0.60%.

Even so, GBTC’s Bitcoin is still the largest in the world. The company holds more than $ 38 billion in trusted top crypto assets for its customer base and is continuously looking to add more cryptocurrencies to its portfolio.

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