I've been trying to understand for some time the impact of $GBTC (Grayscale Bitcoin Trust) on the price of $BTC. Here's a good article to start, and here's a thread on my current thoughts...

There's no doubt that $GBTC has been a driving force in allowing investors to gain exposure to $BTC. For many investors, it provides the easiest way to get crypto exposure. As a result, $GBTC often trades at a large premium (20%-30%) over spot $BTC 2/9

Recently in January, $BTC prices have declined from a high of >$40k to <$30k (now back near $35k). $GBTC's premium to NAV has also dropped to <5% 3/9

It's worth understanding the mechanics of $GBTC. $GBTC allows accredited investors to buy private shares for 0% premium to NAV, and in return the accredited investors are locked up for 6 months. If you are a non-accredited investor, i.e. retail, you don't have this option 4/9

Many sophisticated investors have taken advantage of this arbitrage opportunity. One way an accredited investor can buy private shares of $GBTC is by depositing BTC (often times with leverage). In doing so, they can collect the $GBTC premium 5/9