Asset manager Grayscale halted trading on Grayscale Bitcoin Trust (GBTC), the world’s largest publicly-tradable bitcoin investment vehicle.

The web page describing GBTC on Grayscale’s website now displays the following message:

The Grayscale® Bitcoin Trust private placement is offered on a periodic basis throughout the year and is currently closed.

While it is not clear why the company decided to close inflow to the bitcoin trust, the decision was made soon after the trust began trading at steep discount to the value of the underlying bitcoin. According to YCharts data, the GBTC trading price fell to a low of 11.5% below the fund's net asset value on March 4. Currently, GBTC’s discount is just over 3.2%.

This is the first time GBTC has traded at a discount in the last five years.

The price of GBTC shares often become disconnected from the fund's underlying value.  In 2017, GBTC traded at up to a 132.6% premium compared to the price of bitcoin held by the trust. It is also probably not coincidental that Grayscale recently began hiring exchange-traded fund (ETF) experts.

Unlike an ETF, the Grayscale Bitcoin Trust has no redemption mechanism. The website for Purpose Bitcoin ETF, a recently-launched Canadian Bitcoin ETF, reads:

"An ETF provides a more pure exposure to Bitcoin and the structure better reflects what investors are looking for – to track the price of Bitcoin. Unlike ETFs, closed-end funds cannot quickly add or remove units to maintain consistent exposure. [...] An ETF has a robust creation and redemption process that allows exposure to expand and contract as necessary to accommodate demand."

On Greenhouse, a hiring platform, Grayscale’s page shows that the company has posted openings for nine different ETF-related positions, including a creation and redemption specialist, a compliance officer, a financial reporting manager and a product development specialist as well as two sales directors. 

Bitcoin ETF products have yet to be approved for trading in the U.S, but the demand is clear.  Last month, Purpose Invest launched North America's first bitcoin ETF, and after three weeks of trading, the Purpose Bitcoin ETF already held nearly 11,300 BTC, at the time worth about $571 million.

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