GBTC Trading Explodes, Order Book Gap Narrowing

GBTC Trading, as we noted when it launched, hasn’t been exactly lively. Today that changed, GBTC trading volume is up, significantly. After a few days with very little actual trading, over two thousand GBTC shares have been traded and the day isn’t over yet. The result of this extra liquidity has been that the gap between the Ask and Bid price has closed dramatically, only USD $7.00 sits between the current Ask and Bid, and the current highest Bid is only USD $5.00 short of the last sale.

Trading of GBTC, each share of which represents 0.1 BTC, officially started May 4th, and saw 765 shares traded, or a Bitcoin volume of only 76.5. On the 5th, we saw trading drop to 435 (or 43.5 BTC) and yesterday, no trades of GBTC were executed at all.

Today the total traded volume of GBTC is 2,844 shares (or 284.4 BTC) as of 9:37pm BST (4:37pm EST). A remarkable improvement.

The price of GBTC, it should be noted, has gone down during this time, so take that as you will, but it still sits significantly above Bitcoin’s actual price, so I don’t think much should be read into that. Likely, the GBTC price will fall closer inline with Bitcoin’s actual price as more investors get involved with. It may always sit above Bitcoin’s price because of the difficulties in acquiring GBTC compared to BTC, but its price sitting at $50 while 0.1BTC sat at $23 was likely unsustainable.

What it does seem to indicate is an increase of interest in GBTC, and therefore Bitcoin, by the financial institutions that do have access to GBTC trading.

I asked Blockchain Factory CEO and MBA from Columbia University David Mondrus, for theories on why this is happening now. Simply put, he said it just takes a few days for these things to take off:

“It was the second day after open. First day, no-one knew where it would go, and I don’t know what time they opened. Second day, the managers looked it over and decided to jump in. Third day was people looking at fundamentals and taking profit. It’ll continue to oscillate, but I expect the trend for the short term is up.

Whether that reflects in BTC’s price and whether that trend continues mid-long term we will see.”

When asked if that behavior was typical of OTC IPOs he stated that it was, but only for successful offerings.

“Yeah, new successful offerings. Many simply go down after the first day. Compare it to the first three days of any recent tech IPOs and you should see a similar pattern.”

That sounds like good news to me. The GBTC offering is following the pattern of other successful IPOs, despite the vast differences in what it is offering. We will keep you up to date on GBTC events.

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