The demand for the Grayscale Bitcoin Trust (GBTC) continues to ascent with its premium surpassing xxx% on Dec. 3. This indicates that Bitcoin (BTC) is seeing increasing institutional need as its price consolidates higher up $19,000.

The Grayscale Bitcoin Trust is an institutional vehicle that is tradable in the United States through over-the-counter markets. Accredited and institutional investors typically use the trust to obtain exposure to BTC with their brokerage accounts.

Why is the Grayscale Bitcoin Trust premium ascension?

The Grayscale Bitcoin Trust is the go-to institutional vehicle in the U.S. for BTC due to the lack of a Bitcoin exchange-traded fund (ETF).

Other markets, like Canada, have a Bitcoin ETF that investors can use to gain exposure to BTC. Without an ETF, institutions in the U.Due south. plough to alternative vehicles, like the Grayscale Bitcoin Trust, to invest in BTC.

Each share of the trust represents 0.00095346 BTC. Hence, buying one share of the Grayscale Bitcoin Trust is like buying 0.095% of one Bitcoin.

GBTC Discount or Premium to NAV. Source: Ycharts

As of Dec. iii, GBTC is trading at $23.39 across retail and spot markets, Bitcoin is trading at around $19,250, which makes 0.095% of 1 BTC worth around $17.33. This ways that GBTC is roughly 35% more expensive than buying Bitcoin at the current market price.

On Dec. 3, the cost of Bitcoin increased from $nineteen,000 to $nineteen,250 later the U.S. market place closed. When that divergence is deducted, the electric current premium of GBTC is effectually 25% to 30%. Notably, this is the highest level since June when the BTC marketplace price was around $ix,600 prior to rallying college.

Grayscale itself does non charge the premium, notwithstanding. The market prices in the premium as information technology trades in a public marketplace in the United States. When the premium rises, it signifies that more institutions and accredited investors are accumulating BTC via GBTC.

Although the electric current premium is ascent, information technology is notwithstanding relatively low compared with 2017. This suggests that the rally of Bitcoin nevertheless has a lot more than room to run. When GBTC'due south premium increases, information technology typically signifies a bullish trend and an overall increase in investor appetite for BTC.

Consequently, the amount of Bitcoin owned by Grayscale has increased substantially in recent months. Currently, Grayscale owns $ten.19 billion in BTC, co-ordinate to its latest study. What's more, Grayscale bought twice as much Bitcoin than was mined in November.

Institutions are propelling BTC'due south rally

Atop the continuous increase in demand for Bitcoin on Grayscale, Travis Kling, a fund manager at Ikigai, found similarities between BTC's past intraday cost spikes and the archway of new institutions.

The price nautical chart of Bitcoin with institutional news. Source: Travis Kling

Kling cited a chart that marks when major institutions — such as JPMorgan Hunt, Citibank, Blackrock and Guggenheim — spoke positively most BTC, which was seemingly followed past more upside for BTC price. On Dec. 1, he said:

"I call this chart 'The Traditional Onslaught'. We've been talking well-nigh 'The Herd' for 3+ years. The Herd requires career risk cover. This is that. They are by definition not early adopters, but their pockets are deep & their capital is sticky. #Bitcoin is simply getting started."

Unlike previous bull cycles, institutions are at present more than actively involved in the electric current Bitcoin rally. The clash betwixt institutions accumulating BTC and whales selling might accept furthered fueled the extreme volatility in the market.

In the by several days, Bitcoin has been recording wild price swings within a matter of hours afterwards getting rejected past $20,000. This has also led analysts to accept mixed opinions on where BTC is heading next, as Cointelegraph previously reported.

At the same fourth dimension, several indicators suggest that Bitcoin may be on the verge of breaking $20,000 sooner rather than after.