Grayscale Bitcoin Trust discount shrinks by 12% as stock market falls and BTC accumulation increases

• The Grayscale Bitcoin Trust premium rising could also be attributed to the recent Blackrock ETF filing.
• The S&P500 Index declining by 1.5% also contributed to recovery, given SPX and BTC share a negative correlation at the moment.
• Net unrealized profits rose in the same duration, indicating investors are in a position to sell for profits.

Up until last week, pining for a Bitcoin price recovery seemed like a very difficult position. However, the biggest cryptocurrency in the world has outperformed these assumptions at the time of writing. As much as the reason behind this is important, the impact of the rise is also important and visible on GBTC.

Bitcoin price rise pushes Grayscale Bitcoin Trust higher

Grayscale Bitcoin Trust, also known as GBTC, has been losing its value for the most part of the last two months. The discount to Net Asset Value (NAV) kept rising before hitting nearly 44% about seven days ago. Somehow in these seven days, the bullish momentum grew, and the GBTC discount contracted by 12%.

GBTC discount to NAV

This shrank the discount to NAV to 36% at the time of writing. This bullishness is also reflected in Bitcoin price, which is currently trading at $28,300. A huge credit to the rise in price and value goes back to Bitcoin whales which heavily accumulated over the weekend. 

More than 124,000 BTC worth over $3.3 billion was picked up by these investors, which spiked demand and pulled the price back up.

Bitcoin whale accumulation

Another reason suspected to be behind the rise is the decline of the stock market. S&P 500 index slipped on Friday and continued its decline this week. Falling 1.66% at its lowest before the market closed, SPX observed a sudden shift in market trend. 

This negative change positively impacted Bitcoin price as BTC and SPX presently share a negative correlation of -0.66. Thus any losses for the stock market will prove to be good for the crypto market and vice versa.

Bitcoin Correlation to S&P 500 Index

Regardless of the cause, what matters at the moment is that a significant amount of supply has moved from non-profitable to profitable. The Net Unrealized Profit/Loss (NUPL) indicator observed a bounce back, inducing hope in the investors. 

Bitcoin NUPL

Put simply, Bitcoin is now vulnerable to a sell-off that could be the result of sudden profit-taking, which would prove to be harmful to the cryptocurrency. The recovery marked by GBTC could also vanish, which must be avoided as much as possible.

---